26660 Federal Register / Vol. 76, No. 89 / Monday, May 9, 2011 / Proposed Rules 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

21 CFR Part 1316 

DEPARTMENT OF JUSTICE 

28 CFR Parts 8 and 9 

[Docket No. OAG 127; AG Order No. 3263– 

2011] 

RIN 1105–AA74 

Consolidation of Seizure and 

Forfeiture Regulations 

AGENCY: Department of Justice. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Department of Justice 

(the Department) proposes to revise, 

consolidate, and update its seizure and 

forfeiture regulations, to conform those 

regulations to the Civil Asset Forfeiture 

Reform Act (CAFRA) of 2000 to reflect 

organizational changes that have 

occurred within the Department, and to 

make other changes. 

DATES: Written comments must be 

postmarked and electronic comments 

must be submitted on or before July 8, 

2011. Commenters should be aware that 

the electronic Federal Docket 

Management System (FDMS) will not 

accept comments after Midnight Eastern 

Time on the last day of the comment 

period. 

ADDRESSES: Comments may be mailed to 

Legal Policy, Asset Forfeiture and 

Money Laundering Section, Criminal 

Division, U.S. Department of Justice, 

1400 New York Avenue, NW., Bond 

Building, Tenth Floor, Washington, DC 

20005. Comments are available for 

public inspection at the above address 

by calling (202) 514–1263 to arrange for 

an appointment. To ensure proper 

handling, please reference OAG Docket 

No. 127 on your correspondence. You 

may submit comments electronically or 

view an electronic version of this 

proposed rule at http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Beliue Risher, Editor, 1400 New York 

Avenue, NW., Room 2218, Bond 

Building, Washington, DC 20530. 

Telephone: (202) 514–1263. 

SUPPLEMENTARY INFORMATION: 

POSTING OF PUBLIC COMMENTS: 

Please note that all comments received 

are considered part of the public record 

and made available for public 

inspection online at http:// 

www.regulations.gov. Such information 

includes personal identifying 

information (such as your name, 

address, etc.) voluntarily submitted by 

the commenter. 

If you want to submit personal 

identifying information (such as your 

name, address, etc.) as part of your 

comment, but do not want it to be 

posted online, you must include the 

phrase ‘‘PERSONAL IDENTIFYING 

INFORMATION’’ in the first paragraph 

of your comment. You also must put all 

the personal identifying information 

you do not want posted online in the 

first paragraph of your comment and 

identify what information you want 

redacted. 

If you want to submit confidential 

business information as part of your 

comment but do not want it to be posted 

online, you must include the phrase 

‘‘CONFIDENTIAL BUSINESS 

INFORMATION’’ in the first paragraph 

of your comment. You also must 

prominently identify confidential 

business information to be redacted 

within the comment. If a comment has 

so much confidential business 

information that it cannot be effectively 

redacted, all or part of that comment 

may not be posted on http:// 

www.regulations.gov. 

Personal identifying information and 

confidential business information 

identified and located as set forth above 

will be placed in the agency’s public 

docket file, but not posted online. If you 

wish to inspect the agency’s public 

docket file in person by appointment, 

please see the FOR FURTHER INFORMATION

CONTACT paragraph. 

The reason that the Department is 

requesting electronic comments before 

Midnight Eastern Time on the day the 

comment period closes is because the 

inter-agency FDMS, which receives 

electronic comments at 

www.regulations.gov, terminates the 

public’s ability to submit comments at 

Midnight Eastern Time on the day the 

comment period closes. 

Commenters in time zones other than 

Eastern may want to take this fact into 

account so that their electronic 

comments can be received. The 

constraints imposed by the FDMS 

online system do not apply to comments 

submitted via U.S. mail, which will be 

considered as timely filed if they are 

postmarked before Midnight on the day 

the comment period closes. 

I. Overview 

First, the proposed rule recognizes 

that the Bureau of Alcohol, Tobacco, 

Firearms, and Explosives (ATF) is now 

part of the Department of Justice. On 

November 25, 2002, the President 

signed into law the Homeland Security 

Act (HSA) of 2002, Public Law 107–296, 

116 Stat. 2135. Section 1111 of the HSA 

established in the Department of Justice 

the ‘‘Bureau of Alcohol, Tobacco, 

Firearms, and Explosives’’ and generally 

transferred law enforcement functions, 

and seizure and forfeiture authority, of 

the Bureau of Alcohol, Tobacco, and 

Firearms from the Department of the 

Treasury to the Department of Justice. 

This transfer became effective on 

January 24, 2003. By this rule, the 

Department proposes consolidating its 

regulations governing the seizure and 

administrative forfeiture of property by 

ATF, the Drug Enforcement 

Administration (DEA), and the Federal 

Bureau of Investigation (FBI). Among 

other things, this rulemaking identifies 

the scope of these regulations, updates 

definitions, identifies the scope of 

authority available to each seizing 

agency (ATF, DEA, and FBI) to seize 

property for forfeiture, and provides 

procedures governing practical issues 

regarding the seizure, custody, 

inventory, appraisal, settlement, and 

release of property subject to forfeiture. 

See proposed sections 8.1–8.7 of this 

rule. 

Second, the rule proposes conforming 

the seizure and forfeiture regulations of 

ATF, DEA, FBI, and the Department’s 

Criminal Division to address procedural 

changes necessitated by the Civil Asset 

Forfeiture Reform Act (CAFRA) of 2000, 

Public Law 106–185, 114 Stat. 202. The 

rule also incorporates CAFRA’s 

innocent owner defense into the 

remission regulations. Where CAFRA is 

silent or ambiguous on a subject relating 

to administrative forfeiture procedure, 

the proposed rule interprets CAFRA 

based on case law and agency expertise 

and experience. 

Third, the rule proposes updating the 

regulations to conform with other 

authorities and current forfeiture 

practice. Thus, proposed § 8.14 adds a 

provision to the Department’s 

regulations allowing for the preforfeiture disposition of seized property 

when the property is liable to perish or 

to waste or to be greatly reduced in 

value while being held for forfeiture, or 

when the expense of holding the 

property is or will be disproportionate 

to its value. Section 8.11 clarifies that 

administrative and criminal judicial 

forfeiture proceedings are not mutually 

exclusive, and § 8.16 affirms that the 

United States is not liable for attorney 

fees in any administrative forfeiture 

proceeding. Section 8.23 adds a 

provision defining the allowable redelegations of authority under the 

regulations. Section 8.9(a)(1) updates 

the forfeiture regulations by adding the 

option of publishing notice for 

administrative forfeitures on an official 

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government Internet site instead of in a 

newspaper. 

Fourth, the proposed rule amends the 

list of designated officials at 28 CFR part 

9 governing petitions for remission or 

mitigation of forfeiture, clarifies the 

existing regulations pertaining to 

victims, and makes remission available 

to third parties who reimburse victims 

under an indemnification agreement. 

II. Discussion 

A. Consolidation of the Regulations 

Governing the Seizure and Forfeiture of 

Property by ATF, DEA, and FBI 

Consolidating the forfeiture 

regulations used by ATF (formerly 27 

CFR part 72), DEA (21 CFR part 1316, 

subparts E and F), and FBI (28 CFR part 

8 and 21 CFR part 1316, subparts E and 

F) will achieve greater consistency 

within the Department and will promote 

overall fairness in the administrative 

forfeiture process. 

The proposed rule removes 21 CFR 

part 1316, subparts E and F and replaces 

them by adding an amended 28 CFR 

part 8 governing the seizure and 

forfeiture of property by each agency. 

Part 8 is divided into subparts A, B, and 

C. Subpart A contains generally 

applicable provisions for seizures and 

forfeitures by ATF, DEA, and FBI. 

Subpart B contains expedited 

procedures for property seized by DEA 

and FBI for violations involving 

personal use quantities of a controlled 

substance. Subpart C includes the 

permitted re-delegations of authority 

under these regulations. 

However, this consolidation does not 

constitute the entirety of the 

Department’s forfeiture regulations. ATF 

continues to enforce and administer the 

provisions of the National Firearms Act 

(NFA), ch. 757, 48 Stat. 1236 (1934) 

(codified at 26 U.S.C. ch. 53). Pursuant 

to 18 U.S.C. 983(i)(2), Internal Revenue 

Code forfeitures, including NFA 

forfeitures, are not subject to CAFRA’s 

procedural requirements. NFA civil 

forfeiture procedure is governed, for the 

most part, by the Customs laws (19 

U.S.C. 1602–1618) including the notice 

and cost bond requirements. In 

addition, pursuant to the Customs laws, 

the Government’s initial burden of proof 

in an NFA civil forfeiture is to 

demonstrate probable cause to believe 

that the property is forfeitable. Further, 

there is no innocent ownership defense 

to forfeiture under the NFA. However, 

NFA forfeitures are subject to CAFRA’s 

attorney fees requirement. 

B. CAFRA Procedural Changes 

Incorporated in the Proposed Rule 

CAFRA’s section 2 created 18 U.S.C. 

983, which includes the general rules 

for civil forfeiture proceedings. This 

rule proposes to implement certain 

procedural changes in the conduct of 

administrative forfeitures as required by 

18 U.S.C. 983. These changes address 

procedures relating to notice of seizure, 

filing of claims, hardship requests, and 

releases of property. 

Notice of seizure. Section 983(a)(1) 

establishes time deadlines and other 

procedures for the sending of personal 

written notices of seizures to parties 

with a potential interest in the property. 

These time deadlines and procedures 

are in addition to, and in some respects 

different from, procedures under the 

Customs laws. The Customs laws 

forfeiture procedures (19 U.S.C. 1602– 

1618), which are incorporated by 

reference ‘‘insofar as applicable’’ in 

forfeiture statutes enforced by the 

Department of Justice (e.g., 21 U.S.C. 

881(d)), require that ‘‘[w]ritten notice of 

seizure together with information on the 

applicable procedures shall be sent to 

each party who appears to have an 

interest in the seized property.’’ See 19 

U.S.C. 1607. CAFRA, as codified at 18 

U.S.C. 983(a)(1), requires that notice be 

sent within 60 days of seizure, or within 

90 days of a seizure by a state or local 

agency, or within 60 days of 

establishing the interested party’s 

identity if it is not known at the time of 

seizure. CAFRA also provides that a 

supervisory official of the seizing 

agency may grant a single 30-day 

extension if certain conditions are 

satisfied and that extensions thereafter 

may only be granted by a court. Section 

8.9 of the proposed rule incorporates 

these notice-related provisions of 

CAFRA. 

Filing of administrative claims. 

Section 983(a)(2) of title 18 of the 

United States Code modifies the 

procedure for filing a claim to seized 

property. The Customs laws procedure 

applicable to claims in Department of 

Justice forfeitures provides that, to 

contest an administrative forfeiture, a 

claimant has 20 days after the first 

published notice of seizure to file with 

the seizing agency both a claim and a 

cost bond for $5,000 or 10 percent of the 

property’s value, whichever is less, but 

not less than $250. See 19 U.S.C. 1608. 

Section 983(a)(2) eliminates the cost 

bond requirement for forfeitures covered 

by CAFRA and allows the filing of 

claims not later than the deadline set 

forth in a personal notice letter. The 

deadline must be at least 35 days after 

the date the letter was mailed. Persons 

not receiving a notice letter must file a 

claim within 30 days after the date of 

final publication of notice of seizure. 

Section 983(a)(2) also adds provisions 

specifying the information required for 

a valid claim. It reflects the amendments 

to 18 U.S.C. 983(a)(2)(C)(ii) in the Paul 

Coverdell National Forensic Sciences 

Improvement Act of 2000, Public Law 

106–561, 114 Stat. 2787, which 

retroactively deleted CAFRA’s original 

requirements that claimants provide 

with their claims documentary evidence 

supporting their interest in the seized 

property and state that their claims are 

not frivolous. Consequently, pursuant to 

section 21 of CAFRA (establishing 

CAFRA’s effective date), the amended 

section 983(a)(2)(C)(ii) applies to any 

forfeiture proceeding commenced on or 

after August 23, 2000. Section 8.10 of 

the proposed rule incorporates these 

section 983(a)(2) changes to the claim 

procedures. 

Release of seized property if forfeiture 

is not commenced. Section 8.13 of the 

proposed rule provides procedures to 

implement 18 U.S.C. 983(a)(3). Section 

983(a)(3) requires the release of seized 

property pursuant to regulations 

promulgated by the Attorney General 

and prohibits the United States from 

pursuing further action for civil 

forfeiture if the United States does not 

institute judicial forfeiture proceedings 

against the property within 90 days after 

an administrative claim has been filed 

and no extension of time has been 

obtained from a court. 

Hardship request. Section 8.15 of the 

proposed rule implements 18 U.S.C. 

983(f), which provides procedures and 

criteria for the release of seized property 

(subject to certain exceptions) pending 

the completion of judicial forfeiture 

proceedings when a claimant’s request 

for such release establishes that 

continued government custody will 

cause substantial hardship that 

outweighs the risk that the property will 

not remain available for forfeiture. 

Expedited release of property. Subpart 

B, §§ 8.17 through 8.22 of the proposed 

rule, incorporates and amends, to the 

extent required by CAFRA, the preexisting regulations for expedited 

forfeiture proceedings for certain 

property. These regulations, 21 CFR part 

1316, subpart F, provided expedited 

procedures for conveyances seized for 

drug-related offenses and property 

seized for violations involving personal 

use quantities of a controlled substance. 

By repealing 21 U.S.C. 888 (expedited 

procedures for seized conveyances), 

CAFRA eliminated the statutory basis 

for the expedited procedure regulations 

pertaining to drug-related conveyance 

seizures. Accordingly, §§ 8.17 through 

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26662 Federal Register / Vol. 76, No. 89 / Monday, May 9, 2011 / Proposed Rules 

8.22 of the proposed rule omit the 21 

CFR part 1316, subpart F provisions 

applicable to drug-related conveyance 

seizures. The remaining provisions 

apply only where property is seized for 

administrative forfeiture involving 

controlled substances in personal use 

quantities. 

Remissions and mitigations. For 

consistency with CAFRA’s uniform 

innocent owner defense, 18 U.S.C. 

983(d), the proposed rule incorporates 

the innocent owner provisions of 

sections 983(d)(2)(A) and 983(d)(3)(A) 

in a new 28 CFR 9.5(a)(l). 

Forfeitures affected by CAFRA and 

the proposed rule. CAFRA’s changes 

apply to civil forfeiture proceedings 

commenced on or after August 23, 2000, 

with the exception of civil forfeitures 

under the following: The Tariff Act of 

1930 or any other provision of law 

codified in title 19; the Internal Revenue 

Code of 1986; the Federal Food, Drug, 

and Cosmetic Act (21 U.S.C. 301 et 

seq.); the Trading with the Enemy Act 

(50 U.S.C. App. 1 et seq.) or the 

International Emergency Economic 

Powers Act (50 U.S.C. 1701 et seq.); or 

section 1 of title VI of the Act of June 

15, 1917 (22 U.S.C. 401). These 

regulations apply to all forfeitures 

administered by the Department of 

Justice with the exception of seizures 

and forfeitures under the statutes listed 

in 18 U.S.C. 983(i). The authority of 

seizing agencies to conduct 

administrative forfeitures derives from 

the procedural provisions of the 

Customs laws where those provisions 

are incorporated by reference in the 

substantive forfeiture statutes enforced 

by the agencies. 

C. Changes to the Previous Regulations 

Governing the Seizure and Forfeiture of 

Property by ATF, DEA, and FBI 

Pre-forfeiture disposition. The 

provision providing for the preforfeiture disposition of seized property, 

§ 8.14, is needed to implement the 

authority of 19 U.S.C. 1612(b), which is 

one of the procedural Customs statutes 

incorporated by reference into the 

forfeiture statutes enforced by the 

Department of Justice. Section 1612(b) 

authorizes pre-forfeiture disposal of 

seized property, pursuant to regulations, 

when the property is liable to perish or 

to waste or to be greatly reduced in 

value by keeping, or when the costs of 

maintaining the property pending 

forfeiture are disproportionate to the 

property’s value. The proposed rule 

enables the Department of Justice to use 

the authority of section 1612(b) in 

appropriate cases. 

Internet publication. The proposed 

rule updates the forfeiture regulations 

by adding, in § 8.9(a)(1)(ii), a provision 

for the publication of administrative 

forfeiture notices on an official 

government Internet site instead of in 

newspapers. The statute governing the 

publication of notice in administrative 

forfeiture proceedings, 19 U.S.C. 1607, 

does not require a specific means of 

publication. Section 8.9(a)(1)(ii) will 

provide ATF, DEA, and FBI with the 

choice to use the Internet as a more 

effective and less costly alternative to 

the newspaper publication provided for 

in § 8.9(a)(1)(i). This grant of authority 

parallels a similar grant of authority in 

Rule G(4)(a)(iv)(C) of the Supplemental 

Rules for Admiralty or Maritime Claims 

and Asset Forfeiture Actions. 

Pursuant to Rule G(4)(a)(iv)(C), in all 

civil judicial forfeitures, the 

Government may now employ the 

option of giving public notice through 

the Internet rather than in a newspaper. 

Section 8.9(a)(1)(ii) will permit the 

Department of Justice agencies to 

likewise use the Internet to provide 

notice in administrative forfeitures, a 

cost savings that is particularly 

important as the volume of 

administrative forfeitures is much 

greater than judicial forfeitures. There is 

strong statistical proof that Internet 

access is now available to the vast 

majority of United States residents. 

Internet access continues to grow, while 

newspaper circulation is declining, and 

in some markets, the option to publish 

in a traditional newspaper may not be 

available in the next few years. 

D. Regulations at 28 CFR Part 9 

Governing the Remission or Mitigation 

of Forfeitures 

This proposed rule includes 

modifications to the regulations 

governing the remission or mitigation of 

forfeiture at 28 CFR part 9. Sections 

9.3(e)(2) is revised by deleting 

references to DEA’s ‘‘Office of Chief 

Counsel’’ and referring instead to DEA’s 

‘‘Forfeiture Counsel’’ as the pertinent 

official in DEA forfeiture cases, by 

deleting references to ATF’s ‘‘Special 

Agent in Charge, Asset Forfeiture and 

Seized Property Branch,’’ and referring 

instead to ATF’s ‘‘Office of Chief 

Counsel, Forfeiture Counsel,’’ as the 

pertinent official in ATF forfeiture 

cases, and by updating the addresses for 

both DEA and ATF. Section 9.1 changes 

the designation of the official within 

ATF to whom authority to grant 

remission and mitigation has been 

delegated. 

Second, the definition of ‘‘victim’’ in 

§ 9.2 is modified to make remission 

available to qualified third parties who 

reimburse a victim pursuant to an 

indemnification agreement. In addition, 

§ 9.8 is modified to specify the 

procedures applicable to persons 

seeking remission as victims. 

E. Summary of the Impact of the 

Proposed Changes on the Public 

CAFRA enacted additional due 

process protections for property owners 

in Federal civil forfeiture proceedings. 

Section 2(a) of CAFRA, codified at 18 

U.S.C. 983, requires prompt notification 

of administrative forfeiture proceedings. 

As a general rule, in any administrative 

forfeiture proceeding under a civil 

forfeiture statute, the Government must 

send written notice of the seizure and 

the Government’s intent to forfeit the 

property to all persons known to the 

Government who might have an interest 

in the property within 60 days of a 

seizure (or 90 days of a seizure made by 

state or local law enforcement 

authorities and transferred for Federal 

forfeiture). 

CAFRA also changed the procedure 

for filing administrative claims. Section 

983(a)(2)(B) dictates that when the 

agency both publishes and sends notice 

of the seizure and its intent to forfeit the 

property, an owner who receives notice 

by mail has 35 days from the date of 

mailing, and if the personal notice is 

sent but not received, an owner has 30 

days from the date of final publication 

of notice of the seizure, to file a claim 

with the agency. In addition, the notice 

provision in § 8.9(a)(1)(ii) was updated 

to allow the agencies to publish 

administrative forfeiture notices on the 

Internet instead of in newspapers, 

consistent with the procedure for civil 

judicial forfeitures under Rule 

G(4)(a)(iv)(C). 

The filing of a valid claim compels 

the agency to refer the matter to the U.S. 

Attorney. To preserve the option to seek 

civil judicial forfeiture, the U.S. 

Attorney must do one of the following 

within 90 days: (1) Commence a civil 

judicial forfeiture action against the 

seized property; (2) obtain an 

indictment alleging the property is 

subject to criminal forfeiture; (3) obtain 

a good cause extension of the deadline 

from the district court; or (4) return the 

property pending the filing of a 

complaint. If the Government fails to 

take any of these steps within the 

statutory deadline, it must promptly 

release the property and is barred from 

taking any further action to civilly 

forfeit the property in connection with 

the underlying offense. 

Prior to CAFRA, claims in an 

administrative forfeiture required an 

accompanying bond of either $5,000 or 

10 percent of the value of the seized 

property, whichever was lower. Section 

983(a)(2) eliminated the bond 

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requirement, in forfeitures covered by 

CAFRA, to give the property owner 

greater access to Federal court. 

However, to prevent frivolous claims, 

CAFRA requires the claimant to state 

the basis for his or her interest in the 

property in the claim under oath. 

Under CAFRA, claimants also have a 

right to petition for immediate release of 

seized property on grounds of hardship 

with a 30-day deadline on judicial 

resolution of such petitions. Section 

983(f)(7) provides that if the court grants 

a petition, it may also enter any order 

necessary to ensure that the value of the 

property is maintained during the 

pendency of the forfeiture action, 

including permitting inspection, 

photographing, and inventory of the 

property, fixing a bond pursuant to Rule 

E(5) of the Supplemental Rules for 

Certain Admiralty or Maritime Claims, 

or requiring the claimant to obtain or 

maintain insurance on the property. It 

also provides that the Government may 

place a lien or file a lis pendens on the 

property. 

It is important to note that CAFRA’s 

deadlines apply only to civil forfeiture 

actions initiated by commencement of 

an administrative proceeding under 

section 983(a) and do not apply to 

actions commenced solely as civil 

judicial forfeitures. However, the vast 

majority of civil forfeitures are handled 

administratively. 

CAFRA changed the procedures for 

the expedited release of conveyances 

and property seized for drug offenses to 

apply only where property is seized for 

administrative forfeiture involving 

personal use quantities of a controlled 

substance. 

Although CAFRA enacted a provision 

granting attorney fees to substantially 

prevailing parties in civil judicial 

forfeitures, the regulations make it clear 

that the United States is not liable for 

attorney fees or costs in administrative 

forfeiture proceedings, even if the 

matter is referred to the U.S. Attorney 

and the U.S. Attorney declines to 

initiate a judicial forfeiture on the 

property. 

In addition to implementing these 

CAFRA reforms, the new regulations 

allow the agencies to sell property that 

is deteriorating rapidly in order to 

preserve the property’s value pending 

resolution of the forfeiture. This 

disposition must be authorized by 

agency headquarters. The regulations 

also specify that the seizing agency must 

promptly deposit any seized U.S. 

currency over $5,000 into the Seized 

Asset Deposit Fund pending forfeiture. 

The only exception is for currency that 

must be retained because it has a 

significant, independent, tangible 

evidentiary purpose. 

The new rule also changes some of 

the procedures relating to crime victims 

in 28 CFR part 9. The definition of 

victim is modified to make remission 

available to qualified third parties who 

reimburse a victim pursuant to an 

insurance or other indemnification 

agreement. See proposed § 9.2(w). In 

addition, § 9.8 is reorganized and a new 

paragraph (a) is added to specify the 

filing procedures applicable to persons 

seeking remission as victims. This 

revision is necessary because the 

current petition filing procedures in 

§ 9.4 are applicable to owners and 

lienholders, but not to victims. Section 

9.8(i) clarifies that the amount of 

compensation available to a particular 

victim may not exceed the victim’s 

share of the net proceeds of the 

forfeiture associated with the activity 

that caused the victim’s loss. In other 

words, a victim is not entitled to full 

compensation, but only the amount of 

compensation available from the 

forfeited property. In addition, the new 

rule makes the statutory innocent owner 

provisions at 18 U.S.C. 983(d)(2)(A) and 

(d)(3)(A) applicable to all owner and 

lienholder petitions for remission. 

Regulatory Certifications 

Executive Order 12866—Regulatory 

Planning and Review 

This regulation has been drafted and 

reviewed in accordance with Executive 

Order 12866, section 1(b), Principles of 

Regulation. The Department of Justice 

has determined that this rule is a 

‘‘significant regulatory action’’ under 

Executive Order 12866, section 3(f), and 

accordingly this rule has been reviewed 

by the Office of Management and 

Budget (OMB). The costs that this rule 

imposes (such as additional personnel 

and higher administrative overhead) fall 

upon the Justice Department, not upon 

the general public. The benefits of this 

rule, however, are numerous. The rule 

increases the efficiency of forfeitures, 

ensures that the agencies provide 

prompt due process and notice, helps 

maintain property values, ensures that 

property is promptly returned to third 

parties if appropriate, eliminates the 

cost bond and its administrative burden, 

and requires more effective processing 

and handling of currency. Publishing 

administrative forfeiture notices on the 

Internet accomplishes a substantial 

financial benefit for the agencies. 

Executive Order 12630—Governmental 

Actions and Interference With 

Constitutionally Protected Property 

Rights 

Executive Order 12630, section 2(a)(3) 

specifically exempts from the definition 

of ‘‘policies that have takings 

implications’’ the seizure and forfeiture 

of property for violations of law. 

Therefore, no actions were deemed 

necessary under the provisions of 

Executive Order 12630. 

Executive Order 12988—Civil Justice 

Reform 

This rule meets the applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988. 

Executive Order 13132—Federalism 

This rule will not have substantial 

direct effects on the States, on the 

relationship between the Federal 

Government and the States, or on 

distribution of power and 

responsibilities among the various 

levels of government. Therefore, in 

accordance with Executive Order 13132, 

it is determined that this rule does not 

have sufficient federalism implications 

to warrant the preparation of a 

Federalism Assessment. 

Regulatory Flexibility Act 

The Attorney General, in accordance 

with the Regulatory Flexibility Act 

(5 U.S.C. 605(b)), has reviewed this 

regulation, and by approving it certifies 

that it will not have a significant 

economic impact on a substantial 

number of small entities. Some owners 

of property subject to administrative or 

judicial forfeiture under laws enforced 

by ATF, DEA, FBI, and the Department’s 

Criminal Division may be small 

businesses as defined under the 

Regulatory Flexibility Act, and under 

size standards established by the Small 

Business Administration. Although the 

regulations affect every administrative 

forfeiture initiated by ATF, DEA, and 

FBI, and every remission or mitigation 

decision by the agencies or the 

Department’s Criminal Division, the 

rule will not change existing forfeiture 

laws. It will only revise and consolidate 

the seizure and forfeiture regulations of 

ATF, DEA, FBI, and the Criminal 

Division to conform to CAFRA, and to 

fill gaps and address ambiguities in 

CAFRA and other seizure and forfeiture 

laws. Accordingly, an initial regulatory 

flexibility analysis is not required. 

Small Business Regulatory Enforcement 

Fairness Act of 1996 

This rule is not a major rule as 

defined by section 251 of the Small 

Business Regulatory Enforcement 

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26664 Federal Register / Vol. 76, No. 89 / Monday, May 9, 2011 / Proposed Rules 

Fairness Act of 1996, 5 U.S.C. 804. This 

rule will not result in an annual effect 

on the economy of $100,000,000 or 

more, a major increase in costs or prices, 

or significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or the ability 

of United States-based companies to 

compete with foreign-based companies 

in domestic and export markets. 

Unfunded Mandates Reform Act of 1995 

This rule will not result in the 

expenditure by state, local and Tribal 

governments, in the aggregate, or by the 

private sector, of $100,000,000 or more 

in any one year, and it will not 

significantly or uniquely affect small 

governments. Therefore, no actions were 

deemed necessary under the provisions 

of the Unfunded Mandates Reform Act 

of 1995. 

Paperwork Reduction Act of 1995 

This proposed rule does not contain 

any information collection requirements 

that require approval by OMB under the 

Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. 

The proposed rule is exempt from the 

Paperwork Reduction Act (PRA) of 

1995, Public Law 104–13, 109 Stat. 163, 

because it does not require a form 

within the meaning of the Act and 

because it falls within the exceptions 

listed in 44 U.S.C. 3518 and 5 CFR 

§ 1320.4. The proposed rule updates the 

existing regulations to comply with 

CAFRA. CAFRA included key reforms 

regarding the rights of property owners 

in Federal forfeiture. Thus, the purpose 

of the proposed rule is not to gather 

information about the claimants or 

petitioners, but rather to give them an 

opportunity, as provided by CAFRA, to 

prove their claim in the forfeiture 

proceeding. 

Under 44 U.S.C. 3502(3)(A), a form 

falls within the PRA if it calls for 

answers to identical questions posed to 

ten or more persons. The proposed rule 

allows owners and victims to file the 

following claims, petitions, or requests. 

None of the filings needs to be in a 

particular form, but the regulations 

require the filer to provide certain 

information, as outlined below. 

(1) Claim: The claim must identify the 

specific property being claimed, the 

claimant’s identity and interest in the 

property, and must be made under oath 

by the claimant. See § 8.10. 

(2) Petition for remission or mitigation 

of seized property: The petitioner must 

include his or her identification 

information, specifics about the seizure, 

a complete description of the property, 

and a description of his or her 

ownership interest in the property. See 

§§ 9.3, 9.4. 

(3) Petition for remission involving 

victims: The petitioner must show a 

pecuniary loss arising from the offense 

underlying the forfeiture, or a related 

offense. See § 9.8(a). 

(4) Petition for expedited release of 

seized property: The petitioner must 

include a complete description of the 

property and the seizure information, a 

statement of the petitioner’s interest in 

the property, and a statement of the 

circumstances justifying expedited 

release. See § 8.19. 

(5) Request for hardship release: The 

request must establish, in general, that 

the claimant has a legitimate interest in 

the property and that it is not 

contraband or available for further 

illegal use. See § 8.15. 

These statutory and regulatory 

requirements do not pose identical 

questions; they provide the guidelines 

for what information is necessary if an 

owner or victim chooses to pursue a 

petition, a claim, or a hardship release. 

Moreover, a forfeiture action would 

fall under one of the three exceptions to 

the PRA listed in 44 U.S.C. 3518(c)(1), 

depending on the type of forfeiture 

proceeding. After property is seized for 

forfeiture, the Federal seizing agency 

may commence an administrative 

forfeiture proceeding against the 

property by providing notice to the 

public and any parties with a known 

ownership interest. An administrative 

forfeiture would fall within the 

definition in section 3518(c)(1)(B)(ii) of 

an ‘‘administrative action * * * 

involving an agency against specific 

individuals or entities.’’ If a claim is 

properly filed in the administrative 

forfeiture, Federal prosecutors must file 

a civil forfeiture complaint against the 

property or include it in a criminal 

indictment within the deadlines laid out 

by CAFRA or return the property. 

A civil forfeiture would fall under the 

PRA exception of 44 U.S.C. 

3518(c)(1)(B)(ii) because it is ‘‘a civil 

action to which the United States * * * 

is a party.’’ Alternatively, if the 

prosecutors include the property in a 

criminal indictment, the criminal 

forfeiture would occur ‘‘during the 

conduct of a Federal criminal 

investigation * * * or during the 

disposition of a particular criminal 

matter’’ and would fall under the 

exception of section 3518(c)(1)(A). 

Thus, a claim or petition filed in 

forfeiture proceedings under the 

proposed rule is not a collection of 

information, as defined by the PRA in 

44 U.S.C. 3502(3)(A), and would fall 

within the exceptions of 44 U.S.C. 

3518(c)(1). 

List of Subjects 

21 CFR Part 1316 

Administrative practice and 

procedure, Authority delegations 

(Government agencies), Drug traffic 

control, Research, Seizures and 

forfeitures. 

28 CFR Part 8 

Administrative practice and 

procedure, Arms and munitions, 

communications equipment, copyright, 

Crime, Gambling, Infants and children, 

Motor vehicles, Prices, Seizures and 

forfeitures, Wiretapping and electronic 

surveillance. 

28 CFR Part 9 

Administrative practice and 

procedure, Crime, Seizures and 

forfeitures. 

Accordingly, under the authority of 5 

U.S.C. 301 and 28 U.S.C. 509–510, and 

for the reasons set forth in the preamble, 

Chapter II of Title 21 and Chapter I of 

Title 28 of the Code of Federal 

Regulations are proposed to be amended 

as follows: 

TITLE 21—FOOD AND DRUGS 

PART 1316—ADMINISTRATIVE 

FUNCTIONS, PRACTICES, AND 

PROCEDURES 

Subparts E and F [Removed] 

1. Remove subparts E and F. 

TITLE 28—JUDICIAL 

ADMINISTRATION 

2. Revise part 8 to read as follow: 

PART 8—FORFEITURE AUTHORITY 

FOR CERTAIN STATUTES 

Subpart A—Seizure and Forfeiture of 

Property 

Sec. 

8.1 Scope of regulations. 

8.2 Definitions. 

8.3 Seizing property subject to forfeiture. 

8.4 Inventory. 

8.5 Custody. 

8.6 Appraisal. 

8.7 Release before claim. 

8.8 Commencing the administrative 

forfeiture proceeding. 

8.9 Notice of administrative forfeiture. 

8.10 Claims. 

8.11 Interplay of administrative and 

criminal judicial forfeiture proceedings. 

8.12 Declaration of administrative 

forfeiture. 

8.13 Return of property. 

8.14 Disposition of property before 

forfeiture. 

8.15 Requests for hardship release of seized 

property. 

8.16 Attorney fees and costs. 

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Subpart B—Expedited Forfeiture 

Proceedings for Property Seizures Based 

on Violations Involving the Possession of 

Personal Use Quantities of a Controlled 

Substance 

8.17 Purpose and scope. 

8.18 Definitions. 

8.19 Petition for expedited release in an 

administrative forfeiture proceeding. 

8.20 Ruling on petition for expedited 

release in an administrative forfeiture. 

8.21 Posting of substitute monetary amount 

in an administrative forfeiture 

proceeding. 

8.22 Special notice provision. 

Subpart C—Other Applicable Provisions 

8.23 Re-delegation of authority. 

Authority: 5 U.S.C. 301; 8 U.S.C. 1103, 

1324(b); 18 U.S.C. 981, 983, 3051; 19 U.S.C. 

1606, 1607, 1608, 1610, 1612(b), 1613, 1618; 

21 U.S.C. 822, 871, 872, 880, 881, 883, 958, 

965; 28 U.S.C. 509, 510; Pub. L. 100–690, sec. 

6079. 

Subpart A—Seizure and Forfeiture of 

Property 

§ 8.1 Scope of regulations. 

(a) This part applies to all forfeitures 

administered by the Department of 

Justice with the exception of seizures 

and forfeitures under the statutes listed 

in 18 U.S.C. 983(i). The authority of 

seizing agencies to conduct 

administrative forfeitures derives from 

the procedural provisions of the 

Customs laws (19 U.S.C. 1602–1618) 

where those provisions are incorporated 

by reference in the substantive forfeiture 

statutes enforced by the agencies. 

(b) The regulations will apply to all 

forfeiture actions commenced on or after 

[EFFECTIVE DATE OF FINAL RULE]. 

§ 8.2 Definitions. 

As used in this part, the following 

terms shall have the meanings specified: 

Administrative forfeiture means the 

process by which property may be 

forfeited by a seizing agency rather than 

through a judicial proceeding. 

Administrative forfeiture has the same 

meaning as nonjudicial forfeiture, as 

that term is used in 18 U.S.C. 983. 

Appraised value means the estimated 

market value of property at the time and 

place of seizure if such or similar 

property was freely offered for sale by 

a willing seller to a willing buyer. 

Appropriate official means, in the 

case of the Drug Enforcement 

Administration (DEA), the Forfeiture 

Counsel, DEA. In the case of the Bureau 

of Alcohol, Tobacco, Firearms, and 

Explosives (ATF), it means the 

Associate Chief Counsel, Office of Chief 

Counsel, ATF. In the case of the Federal 

Bureau of Investigation (FBI), it means 

the Unit Chief, Legal Forfeiture Unit, 

Office of the General Counsel, FBI, 

except as used in §§ 8.9(a)(2), 8.9(b)(2), 

8.10, and 8.15 of this part, where the 

term appropriate official means the 

office or official identified in the notice 

published or personal written notice in 

accordance with § 8.9. 

Contraband means— 

(1) any controlled substance, 

hazardous raw material, equipment or 

container, plants, or other property 

subject to summary forfeiture pursuant 

to sections 511(f) or (g) of the Controlled 

Substances Act (21 U.S.C. 881(f) or (g)); 

or 

(2) any controlled substance imported 

into the United States, or exported out 

of the United States, in violation of law. 

Civil forfeiture proceeding means a 

civil judicial forfeiture action as that 

term is used in 18 U.S.C. 983. 

Domestic value means the same as the 

term appraised value as defined in 

§ 8.2(b) of this part. 

Expense means all costs incurred to 

detain, inventory, safeguard, maintain, 

advertise, sell, or dispose of property 

seized, detained, or forfeited pursuant to 

any law. 

File or filed has the following 

meanings: 

(1) A claim or any other document 

submitted in an administrative 

forfeiture proceeding is not deemed 

filed until actually received by the 

appropriate official identified in the 

personal written notice and the 

published notice specified in § 8.9. It is 

not considered filed if it is received by 

any other office or official, such as a 

court, U.S. Attorney, seizing agent, local 

ATF or DEA office, or FBI Headquarters. 

In addition, a claim in an administrative 

forfeiture proceeding is not considered 

filed if received only by an electronic or 

facsimile transmission. 

(2) For purposes of computing the 

start of the 90-day period set forth in 18 

U.S.C. 983(a)(3), an administrative 

forfeiture claim is filed on the date 

when the claim is received by the 

designated appropriate official, even if 

the claim is received from an 

incarcerated pro se prisoner. 

Interested party means any person 

who reasonably appears to have an 

interest in the property based on the 

facts known to the seizing agency before 

a declaration of forfeiture is entered. 

Mail includes regular or certified U.S. 

mail and mail and package 

transportation and delivery services 

provided by other private or commercial 

interstate carriers. 

Nonjudicial forfeiture has the same 

meaning as administrative forfeiture as 

defined in § 8.2(a). 

Person means an individual, 

partnership, corporation, joint business 

enterprise, estate, or other legal entity 

capable of owning property. 

Property subject to administrative 

forfeiture means any personal property 

of the kinds described in 19 U.S.C. 

1607(a)(1)–(4). 

Property subject to forfeiture refers to 

all property that Federal law authorizes 

to be forfeited to the United States of 

America in any administrative forfeiture 

proceeding, in any civil judicial 

forfeiture proceeding, or in any criminal 

forfeiture proceeding. 

Seizing agency refers to ATF, DEA, or 

FBI. 

§ 8.3 Seizing property subject to forfeiture. 

(a) Authority of seizing agents. All 

special agents of any seizing agency may 

seize assets under any Federal statute 

over which the agency has investigative 

and/or forfeiture jurisdiction. 

(b) Turnover of assets seized by state 

and local agencies. (1) Property that is 

seized by a state or local law 

enforcement agency and transferred to a 

seizing agency for administrative or 

civil forfeiture may be adopted for 

administrative forfeiture without the 

issuance of any Federal seizure warrant 

or other Federal judicial process. 

(2) Where a state or local law 

enforcement agency maintains custody 

of property pursuant to process issued 

by a state or local judicial authority, and 

notifies a seizing agency of the 

impending release of such property, the 

seizing agency may seek and obtain a 

Federal seizure warrant in anticipation 

of a state or local judicial authority 

releasing the asset from state process for 

purposes of Federal seizure, and may 

execute such seizure warrant when the 

state or local law enforcement agency 

releases the property as allowed or 

directed by its judicial authority. 

§ 8.4 Inventory. 

The seizing agent shall prepare an 

inventory of any seized property. 

§ 8.5 Custody. 

(a) All property seized for forfeiture 

by ATF, DEA, or FBI shall be delivered 

to the custody of the U.S. Marshals 

Service (USMS), or a custodian 

approved by the USMS, as soon as 

practicable after seizure, unless it is 

retained as evidence by the seizing 

agency. 

(b) Seized U.S. currency (and, to the 

extent practicable, seized foreign 

currency and negotiable instruments) 

must be deposited promptly in the 

Seized Asset Deposit Fund pending 

forfeiture. Provisional exceptions to this 

requirement may be granted as follows: 

(1) If the seized currency has a value 

less than $5,000 and a supervisory 

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official within a U.S. Attorney’s Office 

determines in writing that the currency 

is reasonably likely to serve a 

significant, independent, tangible 

evidentiary purpose, or that retention is 

necessary while the potential 

evidentiary significance of the currency 

is being determined by scientific testing 

or otherwise; or 

(2) If the seized currency has a value 

greater than $5,000 and the Chief of the 

Asset Forfeiture and Money Laundering 

Section (AFMLS), Criminal Division, 

determines in writing that the currency 

is reasonably likely to serve a 

significant, independent, tangible 

evidentiary purpose, or that retention is 

necessary while the potential 

evidentiary significance of the currency 

is being determined by scientific testing 

or otherwise. 

(c) Seized currency has a significant 

independent, tangible evidentiary 

purpose as those terms are used in 

§§ 8.5(b)(1) and (2) of this part if, for 

example, it bears fingerprint evidence, 

is packaged in an incriminating fashion, 

or contains a traceable amount of 

narcotic residue or some other 

substance of evidentiary significance. If 

only a portion of the seized currency 

has evidentiary value, only that portion 

should be retained; the balance should 

be deposited. 

§ 8.6 Appraisal. 

The seizing agency or its designee 

shall determine the domestic value of 

seized property as soon as practicable 

following seizure. 

§ 8.7 Release before claim. 

(a) After seizure for forfeiture and 

prior to the filing of any claim, ATF’s 

Chief, Asset Forfeiture and Seized 

Property Branch, or designee, the 

appropriate DEA Special Agent in 

Charge, or designee, or the appropriate 

FBI Special Agent in Charge, or 

designee, whichever is applicable, is 

authorized to release property seized for 

forfeiture, provided: 

(1) The property is not contraband, 

evidence of a violation of law, or any 

property, the possession of which by the 

claimant, petitioner, or the person from 

whom it was seized is prohibited by 

state or Federal law, and does not have 

a design or other characteristic that 

particularly suits it for use in illegal 

activities; and 

(2) The official designated in 

paragraph (a) of this section determines 

within 10 days of seizure that there is 

an innocent party with the right to 

immediate possession of the property or 

that the release would be in the best 

interest of justice or the Government. 

(b) Further, at any time after seizure 

and before any claim is referred, such 

seized property may be released if the 

appropriate official of the seizing agency 

determines that there is an innocent 

party with the right to immediate 

possession of the property or that the 

release would be in the best interest of 

justice or the Government. 

§ 8.8 Commencing the administrative 

forfeiture proceeding. 

An administrative forfeiture 

proceeding begins when notice is first 

published in accordance with § 8.9(a) of 

this part, or the first personal written 

notice is sent in accordance with 

§ 8.9(b) of this part, whichever occurs 

first. 

§ 8.9 Notice of administrative forfeiture. 

(a) Notice by publication. (1) After 

seizing property subject to 

administrative forfeiture, the 

appropriate official of the seizing agency 

shall select from the following options 

a means of publication reasonably 

calculated to notify potential claimants 

of the seizure and intent to forfeit and 

sell or otherwise dispose of the 

property: 

(i) Publication once each week for at 

least three successive weeks in a 

newspaper generally circulated in the 

judicial district where the property was 

seized; or 

(ii) Posting a notice on an official 

government Internet site for at least 30 

consecutive days. 

(2) The published notice shall: 

(i) Describe the seized property; 

(ii) State the date, statutory basis, and 

place of seizure; 

(iii) State the deadline for filing a 

claim when personal written notice has 

not been received, at least 30 days after 

the date of final publication of the 

notice of seizure; and 

(iv) State the identity of the 

appropriate official of the seizing agency 

and address where the claim must be 

filed. 

(b) Personal written notice. (1) 

Manner of providing notice. After 

seizing property subject to 

administrative forfeiture, the seizing 

agency, in addition to publishing notice, 

shall send personal written notice of the 

seizure to each interested party in a 

manner reasonably calculated to reach 

such parties. 

(2) Content of personal written notice. 

The personal written notice sent by the 

seizing agency shall: 

(i) State the date when the personal 

written notice is sent; 

(ii) State the deadline for filing a 

claim, at least 35 days after the personal 

written notice is sent; 

(iii) State the date, statutory basis, and 

place of seizure; 

(iv) State the identity of the 

appropriate official of the seizing agency 

and the address where the claim must 

be filed; and 

(v) Describe the seized property. 

(c) Timing of notice. (1) Date of 

personal notice. Personal written notice 

is sent on the date when the seizing 

agency causes it to be placed in the 

mail, delivered to a commercial carrier, 

or otherwise sent by means reasonably 

calculated to reach the interested party. 

The personal written notice required by 

§ 8.9(b) of this part shall be sent as soon 

as practicable, and in no case more than 

60 days after the date of seizure (or 90 

days after the date of seizure by a state 

or local law enforcement agency if the 

property was turned over to a Federal 

law enforcement agency for the purpose 

of forfeiture under Federal law). 

(2) Civil judicial forfeiture. If, before 

the time period for sending notice 

expires, the Government files a civil 

judicial forfeiture action against the 

seized property and provides notice of 

such action as required by law, personal 

notice of administrative forfeiture is not 

required under paragraph (c)(1) of this 

section. 

(3) Criminal indictment. If, before the 

time period for sending notice under 

paragraph (c)(1) of this section expires, 

no civil judicial forfeiture action is filed, 

but a criminal indictment or 

information is obtained containing an 

allegation that the property is subject to 

forfeiture, the seizing agency shall 

either: 

(i) Send timely personal written 

notice and continue the administrative 

forfeiture proceeding; or 

(ii) After consulting with the U.S. 

Attorney, terminate the administrative 

forfeiture proceeding and notify the 

custodian to return the property to the 

person having the right to immediate 

possession unless the U.S. Attorney 

takes the steps necessary to maintain 

custody of the property as provided in 

the applicable criminal forfeiture 

statute. 

(4) Subsequent Federal seizure. If 

property is seized by a state or local law 

enforcement agency, but personal 

written notice is not sent to the person 

from whom the property is seized 

within the time period for providing 

notice under paragraph (c)(1) of this 

section, then any administrative 

forfeiture proceeding against the 

property may commence if: 

(i) The property is subsequently 

seized or restrained by the seizing 

agency pursuant to a Federal seizure 

warrant or restraining order and the 

seizing agency sends notice as soon as 

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practicable, and in no case more than 60 

days after the date of the Federal 

seizure; or 

(ii) The owner of the property 

consents to forfeiture of the property. 

(5) Tolling. (i) In states or localities 

where orders are obtained from a state 

court authorizing the turnover of seized 

assets to a Federal seizing agency, the 

period from the date an application or 

motion is presented to the state court for 

the turnover order through the date 

when such order is issued by the court 

shall not be included in the time period 

for providing notice under paragraph 

(c)(1) of this section. 

(ii) If property is detained at an 

international border or port of entry for 

the purpose of examination, testing, 

inspection, obtaining documentation, or 

other investigation relating to the 

importation of the property into, or the 

exportation of the property from, the 

United States, such period of detention 

shall not be included in the period 

described in paragraph (c)(1) of this 

section. In such cases, the 60-day period 

shall begin to run when the period of 

detention ends, if a seizing agency 

seizes the property for the purpose of 

forfeiture to the United States. 

(6) Identity of interested party. If a 

seizing agency determines the identity 

or interest of an interested party after 

the seizure or adoption of the property, 

but before entering a declaration of 

forfeiture, the agency shall send written 

notice to such interested party under 

paragraph (c)(1) of this section not later 

than 60 days after determining the 

identity of the interested party or the 

interested party’s interest. 

(7) Extending deadline for notice. The 

appropriate official of the seizing agency 

may extend the period for sending 

personal written notice under these 

regulations in a particular case for a 

period not to exceed 30 days (which 

period may not be further extended 

except by a court pursuant to 18 U.S.C. 

983(a)(1)(C) and (D)), if the appropriate 

official determines, and states in 

writing, that there is reason to believe 

that notice may have an adverse result, 

including: endangering the life or 

physical safety of an individual; flight 

from prosecution; destruction of or 

tampering with evidence; intimidation 

of potential witnesses; or otherwise 

seriously jeopardizing an investigation 

or unduly delaying a trial. 

(8) Certification. The appropriate 

official of the seizing agency shall 

provide the written certification 

required under 18 U.S.C. 983(a)(1)(C) 

when the Government requests it and 

the conditions described in section 

983(a)(1)(D) are present. 

§ 8.10 Claims. 

(a) Filing. In order to contest the 

forfeiture of seized property in Federal 

court, any person asserting an interest in 

seized property subject to an 

administrative forfeiture proceeding 

under these regulations must file a 

claim with the appropriate official, after 

the commencement of the 

administrative forfeiture proceeding as 

defined in § 8.8 of this part, and not 

later than the deadline set forth in a 

personal notice letter sent pursuant to 

§ 8.9(b) of this part. If personal written 

notice is sent but not received, then the 

intended recipient must file a claim 

with the appropriate official not later 

than 30 days after the date of the final 

publication of the notice of seizure. 

(b) Contents of claim. A claim shall: 

(1) Identify the specific property being 

claimed; 

(2) Identify the claimant and state the 

claimant’s interest in the property; and 

(3) Be made under oath by the 

claimant, not counsel for the claimant, 

and recite that it is made under penalty 

of perjury, consistent with the 

requirements of 28 U.S.C. 1746. An 

acknowledgment, attestation, or 

certification by a notary public alone is 

insufficient. 

(c) Availability of claim forms. The 

claim need not be made in any 

particular form. However, each seizing 

agency conducting forfeitures under 

these regulations must make claim 

forms generally available on request. 

Such forms shall be written in easily 

understandable language. A request for 

a claim form does not extend the 

deadline for filing a claim. Any person 

may obtain a claim form by requesting 

one in writing from the appropriate 

official. 

(d) Cost bond not required. Any 

person may file a claim under § 8.10(a) 

of this part without posting bond, 

except in forfeitures under statutes 

listed in 18 U.S.C. 983(i). 

(e) Referral of claim. Upon receipt of 

a claim that meets the requirements of 

§ 8.10(a) and (b) of this part, the seizing 

agency shall return the property or shall 

suspend the administrative forfeiture 

proceeding and promptly transmit the 

claim, together with a description of the 

property and a complete statement of 

the facts and circumstances surrounding 

the seizure, to the appropriate U.S. 

Attorney for commencement of judicial 

forfeiture proceeding. Upon making the 

determination that the seized property 

will be released, the agency shall 

promptly notify the person with a right 

to immediate possession of the property, 

informing that person to contact the 

property custodian within a specified 

period for release of the property, and 

further informing that person that 

failure to contact the property custodian 

within the specified period for release of 

the property will result in abandonment 

of the property pursuant to applicable 

regulations. The seizing agency shall 

notify the property custodian of the 

identity of the person to whom the 

property should be released. The 

property custodian shall have the right 

to require presentation of proper 

identification or to take other steps to 

verify the identity of the person who 

seeks the release of property, or both. 

(f) Premature filing. If a claim is filed 

with the appropriate official after the 

seizure of property, but before the 

commencement of the administrative 

forfeiture proceeding as defined in § 8.8 

of this part, the claim shall be deemed 

filed on the 30th day after the 

commencement of the administrative 

forfeiture proceeding. If such claim 

meets the requirements of § 8.10(b) of 

this part, the seizing agency shall 

suspend the administrative forfeiture 

proceedings and promptly transmit the 

claim, together with a description of the 

property and a complete statement of 

the facts and circumstances surrounding 

the seizure to the appropriate U.S. 

Attorney for commencement of judicial 

forfeiture proceedings. 

(g) Defective claims. If the seizing 

agency determines that an otherwise 

timely claim does not meet the 

requirements of § 8.10(b) of this part, the 

seizing agency may notify the claimant 

of this determination and allow the 

claimant a reasonable time to cure the 

defect(s) in the claim. If, within the time 

allowed by the seizing agency, the 

requirements of § 8.10(b) of this part are 

not met, the claim shall be void and the 

forfeiture proceedings shall proceed as 

if no claim had been submitted. If the 

claimant timely cures the deficiency, 

then the claim shall be deemed filed on 

the date when the appropriate official 

receives the cured claim. 

§ 8.11 Interplay of administrative and 

criminal judicial forfeiture proceedings. 

An administrative forfeiture 

proceeding pending against seized or 

restrained property does not bar the 

Government from alleging that the same 

property is forfeitable in a criminal case. 

Notwithstanding the fact that an 

allegation of forfeiture has been 

included in a criminal indictment or 

information, the property may be 

administratively forfeited in a parallel 

proceeding. 

§ 8.12 Declaration of administrative 

forfeiture. 

If the seizing agency commences a 

timely proceeding against property 

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subject to administrative forfeiture, and 

no valid and timely claim is filed, the 

appropriate official of the seizing agency 

shall declare the property forfeited. The 

declaration of forfeiture shall have the 

same force and effect as a final decree 

and order of forfeiture in a Federal 

judicial forfeiture proceeding. 

§ 8.13 Return of property. 

(a) If, under 18 U.S.C. 983(a)(3), the 

United States is required to return 

seized property, the U.S. Attorney in 

charge of the matter shall immediately 

notify the appropriate seizing agency 

that the 90-day deadline was not met. 

Under this subsection, the United States 

is not required to return property for 

which it has an independent basis for 

continued custody, including but not 

limited to contraband or evidence of a 

violation of law. 

(b) Upon becoming aware that the 

seized property must be released, the 

agency shall promptly notify the person 

with a right to immediate possession of 

the property, informing that person to 

contact the property custodian within a 

specified period for release of the 

property, and further informing that 

person that failure to contact the 

property custodian within the specified 

period for release of the property may 

result in initiation of abandonment 

proceedings against the property 

pursuant to 41 CFR part 128–48. The 

seizing agency shall notify the property 

custodian of the identity of the person 

to whom the property should be 

released. 

(c) The property custodian shall have 

the right to require presentation of 

proper identification and to verify the 

identity of the person who seeks the 

release of property. 

§ 8.14 Disposition of property before 

forfeiture. 

(a) Whenever it appears to the seizing 

agency that any seized property is liable 

to perish or to waste, or to be greatly 

reduced in value during its detention for 

forfeiture, or that the expense of keeping 

the property is or will be 

disproportionate to its value, the 

appropriate official of the seizing agency 

may order destruction, sale, or other 

disposition of such property prior to 

forfeiture. In addition, the owner may 

obtain release of the property by posting 

a substitute monetary amount with the 

seizing agency to be held subject to 

forfeiture proceedings in place of the 

seized property to be released. Upon 

approval by the appropriate official of 

the seizing agency, the property will be 

released to the owner after the payment 

of an amount equal to the government 

appraised value of the property if the 

property is not evidence of a violation 

of law, is not contraband, and has no 

design or other characteristics that 

particularly suit it for use in illegal 

activities. This payment must be in the 

form of a money order, an official bank 

check, or a cashier’s check made 

payable to the United States Marshals 

Service. A bond in the form of a 

cashier’s check or official bank check 

will be considered as paid once the 

check has been accepted for payment by 

the financial institution that issued the 

check. If a substitute amount is posted 

and the property is administratively 

forfeited, the seizing agency will forfeit 

the substitute amount in lieu of the 

property. The pre-forfeiture destruction, 

sale, or other disposition of seized 

property pursuant to this section shall 

not extinguish any person’s rights to the 

value of the property under applicable 

law. The authority vested in the 

appropriate official under this 

subsection may not be delegated. 

(b) The seizing agency shall 

commence forfeiture proceedings, 

regardless of the disposition of the 

property under § 8.14(a) of this part. A 

person with an interest in the property 

that was destroyed or otherwise 

disposed of under § 8.14(a) of this part 

may file a claim to contest the forfeiture 

of the property or a petition for 

remission or mitigation of the forfeiture. 

No government agent or employee shall 

be liable for the destruction or other 

disposition of property made pursuant 

to § 8.14(a) of this part. The destruction 

or other disposition of the property 

pursuant to this section does not impair 

in rem jurisdiction. 

§ 8.15 Requests for hardship release of 

seized property. 

(a) Under certain circumstances a 

claimant may be entitled to immediate 

release of seized property on the basis 

of hardship. 

(b) Any person filing a request for 

hardship release must also file a claim 

to the seized property pursuant to § 8.10 

of this part and as defined in 18 U.S.C. 

983(a). 

(c) The timely filing of a valid claim 

pursuant to § 8.10 of this part does not 

entitle claimant to possession of the 

seized property, but a claimant may 

request immediate release of the 

property while the forfeiture is pending, 

based on hardship. 

(d) A claimant seeking hardship 

release of property under 18 U.S.C. 

983(f) and these regulations must file a 

written request with the appropriate 

official. The request must establish that: 

(1) The claimant has a possessory 

interest in the property; 

(2) The claimant has sufficient ties to 

the community to provide assurance 

that the property will be available at the 

time of trial; 

(3) The continued possession by the 

Government pending the final 

disposition of forfeiture proceedings 

will cause substantial hardship to the 

claimant, such as preventing the 

functioning of a business, preventing an 

individual from working, or leaving an 

individual homeless; 

(4) The claimant’s likely hardship 

from the continued possession by the 

Government of the seized property 

outweighs the risk that the property will 

be destroyed, damaged, lost, concealed, 

or transferred if it is returned to the 

claimant during the pendency of the 

proceeding; and 

(5) The seized property is not: 

(i) Contraband, any property, the 

possession of which by the claimant, 

petitioner, or the person from whom it 

was seized is prohibited by state or 

Federal law, currency, or other 

monetary instrument, or electronic 

funds unless such currency or other 

monetary instrument or electronic funds 

constitutes the assets of a legitimate 

business which has been seized; 

(ii) Intended to be used as evidence of 

a violation of law; 

(iii) By reason of design or other 

characteristic, particularly suited for use 

in illegal activities; or 

(iv) Likely to be used to commit 

additional criminal acts if returned to 

the claimant. 

(e) A hardship release request 

pursuant to this section shall be deemed 

to have been made on the date when it 

is received by the appropriate official as 

defined in § 8.2(c) of this part or the 

date the claim was deemed filed under 

§ 8.10(f) of this part. If the request is 

ruled on and denied by the appropriate 

official or the property has not been 

released within the 15-day time period, 

the claimant may file a petition in 

Federal district court pursuant to 18 

U.S.C. 983(f)(3). If a petition is filed in 

Federal district court, the claimant must 

send a copy of the petition to the agency 

to which the hardship petition was 

originally submitted and to the U.S. 

Attorney in the judicial district in 

which the judicial petition was filed. 

(f) If a civil forfeiture complaint is 

filed on the property and the claimant 

files a claim with the court pursuant to 

18 U.S.C. 983(a)(4)(A) and Rule G(5) of 

the Supplemental Rules for Certain 

Admiralty and Maritime Claims, a 

hardship petition may be submitted to 

the individual identified in the public 

or personal notice of the civil judicial 

forfeiture action. 

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§ 8.16 Attorney fees and costs. 

The United States is not liable for 

attorney fees or costs in any 

administrative forfeiture proceeding, 

including such proceedings in which a 

claim is filed, the matter is referred to 

the U.S. Attorney, and the U.S. Attorney 

declines to commence judicial forfeiture 

proceedings. 

Subpart B—Expedited Forfeiture 

Proceedings for Property Seizures 

Based on Violations Involving the 

Possession of Personal Use Quantities 

of a Controlled Substance 

§ 8.17 Purpose and scope. 

(a) The following definitions, 

regulations, and criteria are designed to 

establish and implement procedures 

required by section 6079 of the AntiDrug Abuse Act of 1988, Public Law 

100–690, 102 Stat. 4181. They are 

intended to supplement existing law 

and procedures relative to the forfeiture 

of property under the identified 

statutory authority. These regulations do 

not affect the existing legal and 

equitable rights and remedies of those 

with an interest in property seized for 

forfeiture, nor do these provisions 

relieve interested parties from their 

existing obligations and responsibilities 

in pursuing their interests through such 

courses of action. These regulations are 

intended to reflect the intent of 

Congress to minimize the adverse 

impact on those entitled to legal or 

equitable relief occasioned by the 

prolonged detention of property subject 

to forfeiture due to violations of law 

involving personal use quantities of 

controlled substances. The definition of 

personal use quantities of a controlled 

substance as contained herein is 

intended to distinguish between those 

small quantities that are generally 

considered to be possessed for personal 

consumption and not for further 

distribution, and those larger quantities 

generally considered to be intended for 

further distribution. 

(b) In this regard, for violations 

involving the possession of personal use 

quantities of a controlled substance, 

section 6079(b)(2) requires either that 

administrative forfeiture be completed 

within 21 days of the seizure of the 

property, or alternatively, that 

procedures be established that provide a 

means by which an individual entitled 

to relief may initiate an expedited 

administrative review of the legal and 

factual basis of the seizure for forfeiture. 

Should an individual request relief 

pursuant to these regulations and be 

entitled to the return of the seized 

property, such property shall be 

returned immediately following that 

determination, and in no event later 

than 20 days after the filing of a petition 

for expedited release by an owner, and 

the administrative forfeiture process 

shall cease. Should the individual not 

be entitled to the return of the seized 

property, however, the administrative 

forfeiture of that property shall proceed. 

The owner may, in any event, obtain 

release of property pending the 

administrative forfeiture by submitting 

to the agency making the determination 

property sufficient to preserve the 

Government’s vested interest for 

purposes of the administrative 

forfeiture. 

§ 8.18 Definitions. 

As used in this subpart, the following 

terms shall have the meanings specified: 

Commercial fishing industry vessel 

means a vessel that: 

(1) Commercially engages in the 

catching, taking, or harvesting of fish or 

an activity that can reasonably be 

expected to result in the catching, 

taking, or harvesting of fish; 

(2) Commercially prepares fish or fish 

products other than by gutting, 

decapitating, gilling, skinning, 

shucking, icing, freezing, or brine 

chilling; or 

(3) Commercially supplies, stores, 

refrigerates, or transports fish, fish 

products, or materials directly related to 

fishing or the preparation of fish to or 

from a fishing, fish processing, or fish 

tender vessel or fish processing facility. 

Controlled substance has the meaning 

given in 21 U.S.C. 802(6). 

Normal and customary manner means 

that inquiry suggested by particular 

facts and circumstances that would 

customarily be undertaken by a 

reasonably prudent individual in a like 

or similar situation. Actual knowledge 

of such facts and circumstances is 

unnecessary, and implied, imputed, or 

constructive knowledge is sufficient. An 

established norm, standard, or custom is 

persuasive but not conclusive or 

controlling in determining whether an 

owner acted in a normal and customary 

manner to ascertain how property 

would be used by another legally in 

possession of the property. The failure 

to act in a normal and customary 

manner as defined herein will result in 

the denial of a petition for expedited 

release of the property and is intended 

to have the desirable effect of inducing 

owners of the property to exercise 

greater care in transferring possession of 

their property. Owner means one having 

a legal and possessory interest in the 

property seized for forfeiture. Even 

though one may hold primary and direct 

title to the property seized, such person 

may not have sufficient actual beneficial 

interest in the property to support a 

petition as owner if the facts indicate 

that another person had dominion and 

control over the property. 

Personal use quantities means those 

amounts of controlled substances in 

possession in circumstances where 

there is no other evidence of an intent 

to distribute, or to facilitate the 

manufacturing, compounding, 

processing, delivering, importing, or 

exporting of any controlled substance. 

(1) Evidence that possession of 

quantities of a controlled substance is 

for other than personal use may include, 

for example: 

(i) Evidence, such as drug scales, drug 

distribution paraphernalia, drug 

records, drug packaging material, 

method of drug packaging, drug 

‘‘cutting’’ agents and other equipment, 

that indicates an intent to process, 

package or distribute a controlled 

substance; 

(ii) Information from reliable sources 

indicating possession of a controlled 

substance with intent to distribute; 

(iii) The arrest or conviction record of 

the person or persons in actual or 

constructive possession of the 

controlled substance for offenses under 

Federal, state or local law that indicates 

an intent to distribute a controlled 

substance; 

(iv) Circumstances or reliable 

information indicating that the 

controlled substance is related to large 

amounts of cash or any amount of 

prerecorded government funds; 

(v) Circumstances or reliable 

information indicating that the 

controlled substance is a sample 

intended for distribution in anticipation 

of a transaction involving large 

quantities, or is part of a larger delivery; 

(vi) Statements by the possessor, or 

otherwise attributable to the possessor, 

including statements of conspirators, 

that indicate possession with intent to 

distribute; or 

(vii) The fact that the controlled 

substance was recovered from 

sweepings. 

(2) Possession of a controlled 

substance shall be presumed to be for 

personal use when there are no indicia 

of illicit drug trafficking or 

distribution—such as, but not limited 

to, the factors listed above—and the 

amounts do not exceed the following 

quantities: 

(i) One gram of a mixture or substance 

containing a detectable amount of 

heroin; 

(ii) One gram of a mixture or 

substance containing a detectable 

amount of— 

(A) Coca leaves, except coca leaves 

and extracts of coca leaves from which 

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cocaine, ecgonine, and derivations of 

ecgonine or their salts have been 

removed; 

(B) Cocaine, its salts, optical and 

geometric isomers, and salts of isomers; 

(C) Ecgonine, its derivatives, their 

salts, isomers, and salts of isomers; or 

(D) Any compound, mixture, or 

preparation that contains any quantity 

of any of the substances referred to in 

paragraphs (2)(ii)(A) through (C) of this 

definition; 

(iii) 1⁄10th gram of a mixture or 

substance described in paragraph 

(e)(2)(ii) of this section which contains 

cocaine base; 

(iv) 1⁄10th gram of a mixture or 

substance containing a detectable 

amount of phencyclidine (PCP); 

(v) 500 micrograms of lysergic acid 

diethylamide (LSD); 

(vi) One ounce of a mixture or 

substance containing a detectable 

amount of marihuana; 

(vii) One gram of methamphetamine, 

its salts, isomers, and salts of its 

isomers, or one gram of a mixture or 

substance containing a detectable 

amount of methamphetamine, its salts, 

isomers, or salts of its isomers. 

(3) The possession of a narcotic, a 

depressant, a stimulant, a hallucinogen, 

or a cannabis-controlled substance will 

be considered in excess of personal use 

quantities if the dosage unit amount 

possessed provides the same or greater 

equivalent efficacy as the quantities 

described in paragraph (e)(2) of this 

section. 

Property means property subject to 

forfeiture under 21 U.S.C. 881(a)(4), (6), 

and (7); 19 U.S.C. 1595a; and 49 U.S.C. 

80303. 

Seizing agency means the Federal 

agency that has seized the property or 

adopted the seizure of another agency 

and has the responsibility for 

administratively forfeiting the property; 

Statutory rights or defenses to the 

forfeiture means all legal and equitable 

rights and remedies available to a 

claimant of property seized for 

forfeiture. 

§ 8.19 Petition for expedited release in an 

administrative forfeiture proceeding. 

(a) Where property is seized for 

administrative forfeiture involving 

controlled substances in personal use 

quantities the owner may petition the 

seizing agency for expedited release of 

the property. 

(b) Where property described in 

§ 8.19(a) of this part is a commercial 

fishing industry vessel proceeding to or 

from a fishing area or intermediate port 

of call or actually engaged in fishing 

operations, which would be subject to 

seizure for administrative forfeiture for 

a violation of law involving controlled 

substances in personal use quantities, a 

summons to appear shall be issued in 

lieu of a physical seizure. The vessel 

shall report to the port designated in the 

summons. The seizing agency shall be 

authorized to effect administrative 

forfeiture as if the vessel had been 

physically seized. Upon answering the 

summons to appear on or prior to the 

last reporting date specified in the 

summons, the owner of the vessel may 

file a petition for expedited release 

pursuant to § 8.19(a) of this part, and the 

provisions of § 8.19(a) of this part and 

other provisions in this section 

pertaining to a petition for expedited 

release shall apply as if the vessel had 

been physically seized. 

(c) The owner filing the petition for 

expedited release shall establish the 

following: 

(1) The owner has a valid, good faith 

interest in the seized property as owner 

or otherwise; 

(2) The owner reasonably attempted 

to ascertain the use of the property in a 

normal and customary manner; and 

(3) The owner did not know of or 

consent to the illegal use of the 

property, or in the event that the owner 

knew or should have known of the 

illegal use, the owner did what 

reasonably could be expected to prevent 

the violation. 

(d) In addition to those factors listed 

in § 8.19(c) of this part, if an owner can 

demonstrate that the owner has other 

statutory rights or defenses that would 

cause the owner to prevail on the issue 

of forfeiture, such factors shall also be 

considered in ruling on the petition for 

expedited release. 

(e) A petition for expedited release 

must be received by the appropriate 

seizing agency within 20 days from the 

date of the first publication of the notice 

of seizure in order to be considered by 

the seizing agency. The petition must be 

executed and sworn to by the owner and 

both the envelope and the request must 

be clearly marked ‘‘PETITION FOR 

EXPEDITED RELEASE.’’ Such petition 

shall be filed with the appropriate office 

or official identified in the personal 

written notice and the publication 

notice. 

(f) The petition shall include the 

following: 

(1) A complete description of the 

property, including identification 

numbers, if any, and the date and place 

of seizure; 

(2) The petitioner’s interest in the 

property, which shall be supported by 

title documentation, bills of sale, 

contracts, mortgages, or other 

satisfactory documentary evidence; and 

(3) A statement of the facts and 

circumstances, to be established by 

satisfactory proof, relied upon by the 

petitioner to justify expedited release of 

the seized property. 

§ 8.20 Ruling on petition for expedited 

release in an administrative forfeiture 

proceeding. 

(a) If a final administrative 

determination of the case, without 

regard to the provisions of this section, 

is made within 21 days of the seizure, 

the seizing agency need take no further 

action under this section on a petition 

for expedited release received pursuant 

to § 8.19(a) of this part. 

(b) If no such final administrative 

determination is made within 21 days of 

the seizure, the following procedure 

shall apply. The seizing agency shall, 

within 20 days after the receipt of the 

petition for expedited release, determine 

whether the petition filed by the owner 

has established the factors listed in 

§ 8.19(c) of this part and: 

(1) If the seizing agency determines 

that those factors have been established, 

it shall terminate the administrative 

proceedings and return the property to 

the owner (or in the case of a 

commercial fishing industry vessel for 

which a summons has been issued shall 

dismiss the summons), except where it 

is evidence of a violation of law; or 

(2) If the seizing agency determines 

that those factors have not been 

established, the agency shall proceed 

with the administrative forfeiture. 

§ 8.21 Posting of substitute monetary 

amount in an administrative forfeiture 

proceeding. 

(a) Where property is seized for 

administrative forfeiture involving 

controlled substances in personal use 

quantities, the owner may obtain release 

of the property by posting a substitute 

monetary amount with the seizing 

agency to be held subject to forfeiture 

proceedings in place of the seized 

property to be released. The property 

will be released to the owner upon the 

payment of an amount equal to the 

government appraised value of the 

property if the property is not evidence 

of a violation of law and has no design 

or other characteristics that particularly 

suit it for use in illegal activities. This 

payment must be in the form of a 

traveler’s check, a money order, a 

cashier’s check, or an irrevocable letter 

of credit made payable to the seizing 

agency. A bond in the form of a 

cashier’s check will be considered as 

paid once the check has been accepted 

for payment by the financial institution 

which issued the check. 

(b) If a substitute amount is posted 

and the property is administratively 

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forfeited, the seizing agency will forfeit 

the substitute amount in lieu of the 

property. 

§ 8.22 Special notice provision. 

At the time of seizure of property 

defined in § 8.18 of this part for 

violations involving the possession of 

personal use quantities of a controlled 

substance, the seizing agency must 

provide written notice to the possessor 

of the property specifying the 

procedures for the filing of a petition for 

expedited release and for the posting of 

a substitute monetary bond as set forth 

in section 6079 of the Anti-Drug Abuse 

Act of 1988 and implementing 

regulations. 

Subpart C—Other Applicable 

Provisions 

§ 8.23 Re-delegation of authority. 

(a) Re-delegation of authority 

permitted. (1) The powers and 

responsibilities delegated to the DEA 

Forfeiture Counsel by this regulation 

may be re-delegated to attorneys 

working under the direct supervision of 

the DEA Forfeiture Counsel. 

(2) The powers and responsibilities 

delegated to the FBI Unit Chief, Legal 

Forfeiture Unit, by this regulation may 

be re-delegated to the attorneys working 

under the direct supervision of the FBI 

Unit Chief, Legal Forfeiture Unit. 

(3) The powers and responsibilities 

delegated to the Associate Chief 

Counsel, Office of Chief Counsel, ATF 

may be re-delegated to the attorneys 

working under the direct supervision of 

the Associate Chief Counsel, Office of 

Chief Counsel, ATF. 

(b) Re-delegation of authority not 

permitted. (1) The powers and 

responsibilities delegated to the DEA 

Forfeiture Counsel, the FBI Unit Chief, 

Legal Forfeiture Unit, and the ATF 

Associate Chief Counsel, Office of Chief 

Counsel to make decisions regarding the 

disposition of property before forfeiture 

pursuant to § 8.14 of this part may not 

be re-delegated. 

(2) The powers and responsibilities 

delegated to the DEA Forfeiture 

Counsel, the FBI Unit Chief, Legal 

Forfeiture Unit, and the ATF Associate 

Chief Counsel, Office of Chief Counsel 

to make decisions regarding the delay of 

notice of forfeiture pursuant to 

§§ 8.9(c)(7) and (8) of this part and 18 

U.S.C. 983(a)(1)(B)–(C) may not be redelegated. 

3. Revise part 9 to read as follows: 

PART 9—REGULATIONS GOVERNING 

THE REMISSION OR MITIGATION OF 

ADMINISTRATIVE, CIVIL, AND 

CRIMINAL FORFEITURES 

Sec. 

9.1 Purpose, authority, and scope. 

9.2 Definitions. 

9.3 Petitions in administrative forfeiture 

cases. 

9.4 Petitions in judicial forfeiture cases. 

9.5 Criteria governing administrative and 

judicial remission and mitigation. 

9.6 Special rules for specific petitioners. 

9.7 Terms and conditions of remission and 

mitigation. 

9.8 Remission procedures for victims. 

9.9 Miscellaneous provisions. 

Authority: 5 U.S.C. 301; 8 U.S.C. 1103, 

1324(b); 18 U.S.C. 981, 983, 3051; 19 U.S.C. 

1606, 1607, 1608, 1610, 1612(b), 1613, 1618; 

21 U.S.C. 822, 871, 872, 880, 881, 883, 958, 

965; 28 U.S.C. 509, 510; Pub. L. 100–690, sec. 

6079. 

§ 9.1 Purpose, authority, and scope. 

(a) Purpose. This part sets forth the 

procedures for agency officials to follow 

when considering remission or 

mitigation of administrative forfeitures 

under the jurisdiction of the agency, and 

civil judicial and criminal judicial 

forfeitures under the jurisdiction of the 

Department of Justice’s Criminal 

Division. The purpose of this part is to 

provide a basis for the partial or total 

remission of forfeiture for individuals 

who have an interest in the forfeited 

property but who did not participate in, 

or have knowledge of, the conduct that 

resulted in the property being subject to 

forfeiture and, where required, took all 

reasonable steps under the 

circumstances to ensure that such 

property would not be used, acquired, 

or disposed of contrary to law. 

Additionally, the regulations provide for 

partial or total mitigation of the 

forfeiture and imposition of alternative 

conditions in appropriate 

circumstances. 

(b) Authority to grant remission and 

mitigation. (1) Remission and mitigation 

functions in administrative forfeitures 

are performed by the agency seizing the 

property. Within the Federal Bureau of 

Investigation (FBI), authority to grant 

remission and mitigation is delegated to 

the Forfeiture Counsel, who is the Unit 

Chief, Legal Forfeiture Unit, Office of 

the General Counsel; within the Drug 

Enforcement Administration (DEA), 

authority to grant remission and 

mitigation is delegated to the Forfeiture 

Counsel, Office of Chief Counsel; and 

within the Bureau of Alcohol, Tobacco, 

Firearms, and Explosives (ATF), 

authority to grant remission and 

mitigation is delegated to the Associate 

Chief Counsel, Office of Chief Counsel. 

(2) Remission and mitigation 

functions in judicial cases are 

performed by the Criminal Division of 

the Department of Justice. Within the 

Criminal Division, authority to grant 

remission and mitigation is delegated to 

the Chief, Asset Forfeiture and Money 

Laundering Section. 

(3) The powers and responsibilities 

delegated by this part may be redelegated to attorneys or managers 

working under the supervision of the 

designated officials. 

(c) Scope. This part governs any 

petition for remission filed with the 

Attorney General and supersedes any 

Department of Justice regulation 

governing petitions for remission, to the 

extent such regulation is inconsistent 

with this part. 

(d) The time periods and internal 

requirements established in this part are 

designed to guide the orderly 

administration of the remission and 

mitigation process and are not intended 

to create rights or entitlements in favor 

of individuals seeking remission or 

mitigation. This part applies to all 

forfeiture actions commenced on or after 

[EFFECTIVE DATE OF FINAL RULE]. 

§ 9.2 Definitions. 

As used in this part: 

Administrative forfeiture means the 

process by which property may be 

forfeited by a seizing agency rather than 

through judicial proceedings. 

Administrative forfeiture has the same 

meaning as nonjudicial forfeiture, as 

that term is used in 18 U.S.C. 983. 

Appraised value means the estimated 

market value of property at the time and 

place of seizure if such or similar 

property were freely offered for sale 

between a willing seller and a willing 

buyer. 

Assets Forfeiture Fund means the 

Department of Justice Assets Forfeiture 

Fund or Department of the Treasury 

Forfeiture Fund, depending upon the 

identity of the seizing agency. 

Attorney General means the Attorney 

General of the United States or his or 

her designee. 

Beneficial owner means a person with 

actual use of, as well as an interest in, 

the property subject to forfeiture. 

Chief, Asset Forfeiture and Money 

Laundering Section, and Chief, refer to 

the Chief of the Asset Forfeiture and 

Money Laundering Section, Criminal 

Division, United States Department of 

Justice. 

General creditor means one whose 

claim or debt is not secured by a 

specific right to obtain satisfaction 

against the particular property subject to 

forfeiture. 

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Judgment creditor means one who has 

obtained a judgment against the debtor 

but has not yet received full satisfaction 

of the judgment. 

Judicial forfeiture means either a civil 

or a criminal proceeding in a United 

States District Court that may result in 

a final judgment and order of forfeiture. 

Lienholder means a creditor whose 

claim or debt is secured by a specific 

right to obtain satisfaction against the 

particular property subject to forfeiture. 

A lien creditor qualifies as a lienholder 

if the lien: 

(1) Was established by operation of 

law or contract; 

(2) Was created as a result of an 

exchange of money, goods, or services; 

and 

(3) Is perfected against the specific 

property forfeited for which remission 

or mitigation is sought (e.g., a real estate 

mortgage; a mechanic’s lien). 

Net equity means the amount of a 

lienholder’s monetary interest in 

property subject to forfeiture. Net equity 

shall be computed by determining the 

amount of unpaid principal and unpaid 

interest at the time of seizure and by 

adding to that sum unpaid interest 

calculated from the date of seizure 

through the last full month prior to the 

date of the decision on the petition. 

Where a rate of interest is set forth in 

a security agreement, the rate of interest 

to be used in this computation will be 

the annual percentage rate so specified 

in the security agreement that is the 

basis of the lienholder’s interest. In this 

computation, however, there shall be no 

allowances for attorney fees, accelerated 

or enhanced interest charges, amounts 

set by contract as damages, unearned 

extended warranty fees, insurance, 

service contract charges incurred after 

the date of seizure, allowances for 

dealer’s reserve, or any other similar 

charges. 

Nonjudicial forfeiture has the same 

meaning as administrative forfeiture as 

defined in this section. 

Owner means the person in whom 

primary title is vested or whose interest 

is manifested by the actual and 

beneficial use of the property, even 

though the title is vested in another. A 

victim of an offense, as defined in this 

section, may also be an owner if he or 

she has a present legally cognizable 

ownership interest in the property 

forfeited. A nominal owner of property 

will not be treated as its true owner if 

he or she is not its beneficial owner. 

Person means an individual, 

partnership, corporation, joint business 

enterprise, estate, or other legal entity 

capable of owning property. 

Petition means a petition for 

remission or mitigation of forfeiture 

under the regulations in this part. This 

definition includes a petition for 

restoration of the proceeds of sale of 

forfeited property and a petition for the 

value of forfeited property placed into 

official use. 

Petitioner means the person applying 

for remission, mitigation, or restoration 

of the proceeds of sale, or for the 

appraised value of forfeited property, 

under this part. A petitioner may be an 

owner as defined in this section, a 

lienholder as defined in this section, or 

a victim as defined in this section, 

subject to the limitations of § 9.8. 

Property means real or personal 

property of any kind capable of being 

owned or possessed. 

Record means a series of arrests for 

related crimes, unless the arrestee was 

acquitted or the charges were dismissed 

for lack of evidence, a conviction for a 

related crime or completion of sentence 

within ten years of the acquisition of the 

property subject to forfeiture, or two 

convictions for a related crime at any 

time in the past. 

Related crime as defined in this 

section and used in § 9.6(e) means any 

crime similar in nature to that which 

gives rise to the seizure of property for 

forfeiture. For example, where property 

is seized for a violation of the Federal 

laws relating to drugs, a related crime 

would be any offense involving a 

violation of the Federal laws relating to 

drugs or the laws of any state or 

political subdivision thereof relating to 

drugs. 

Related offense as used in § 9.8 

means: 

(1) Any predicate offense charged in 

a Federal Racketeer Influenced and 

Corrupt Organizations Act (RICO) count 

for which forfeiture was ordered; or 

(2) An offense committed as part of 

the same scheme or design, or pursuant 

to the same conspiracy, as was involved 

in the offense for which forfeiture was 

ordered. 

Ruling official means any official to 

whom decision making authority has 

been delegated pursuant to § 9.1(b). 

Seizing agency means the Federal 

agency that seized the property or 

adopted the seizure of another agency 

for Federal forfeiture. 

Victim means a person who has 

incurred a pecuniary loss as a direct 

result of the commission of the offense 

underlying a forfeiture. A drug user is 

not considered a victim of a drug 

trafficking offense under this definition. 

A victim does not include one who 

acquires a right to sue the perpetrator of 

the criminal offense for any loss by 

assignment, subrogation, inheritance, or 

otherwise from the actual victim, unless 

that person has acquired an actual 

ownership interest in the forfeited 

property; provided however, that if a 

victim has received compensation from 

insurance or any other source with 

respect to a pecuniary loss, remission 

may be granted to the third party who 

provided the compensation, up to the 

amount of the victim’s pecuniary loss as 

defined in § 9.8(c). 

Violator means the person whose use 

or acquisition of the property in 

violation of the law subjected such 

property to seizure for forfeiture. 

§ 9.3 Petitions in administrative forfeiture 

cases. 

(a) Notice of seizure. The notice of 

seizure and intent to forfeit the property 

shall advise any persons who may have 

a present ownership interest in the 

property to submit their petitions for 

remission or mitigation within 30 days 

of the date they receive the notice in 

order to facilitate processing. Petitions 

shall be considered any time after notice 

until the property has been forfeited, 

except in cases involving petitions to 

restore the proceeds from the sale of 

forfeited property. A notice of seizure 

shall include the title of the seizing 

agency, the ruling official, the mailing 

and street address of the official to 

whom petitions should be sent, and an 

asset identifier number. 

(b) Persons who may file. (1) A 

petition for remission or mitigation 

must be filed by a petitioner as defined 

in § 9.2 of this part or as prescribed in 

§ 9.9(g) and (h) of this part. A person or 

person on their behalf may not file a 

petition if, after notice or knowledge of 

the fact that a warrant or process has 

been issued for his apprehension, in 

order to avoid criminal prosecution, the 

person: 

(i) Purposely leaves the jurisdiction of 

the United States; 

(ii) Declines to enter or reenter the 

United States to submit to its 

jurisdiction; or 

(iii) Otherwise evades the jurisdiction 

of the court in which a criminal matter 

is pending against the person. 

(2) Section 9.3(b)(1) of this part 

applies to a petition filed by a 

corporation if any majority shareholder, 

or individual filing the claim on behalf 

of the corporation: 

(i) Purposely leaves the jurisdiction of 

the United States; 

(ii) Declines to enter or reenter the 

United States to submit to its 

jurisdiction; or 

(iii) Otherwise evades the jurisdiction 

of the court in which a criminal matter 

is pending against the person. 

(c) Contents of petition. (1) All 

petitions must include the following 

information in clear and concise terms: 

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(i) The name, address, and social 

security or other taxpayer identification 

number of the person claiming an 

interest in the seized property who is 

seeking remission or mitigation; 

(ii) The name of the seizing agency, 

the asset identifier number, and the date 

and place of seizure; 

(iii) A complete description of the 

property, including make, model, and 

serial numbers, if any; and 

(iv) A description of the petitioner’s 

interest in the property as owner, 

lienholder, or otherwise, supported by 

original or certified bills of sale, 

contracts, deeds, mortgages, or other 

documentary evidence. Such 

documentation includes evidence 

establishing the source of funds for 

seized currency or the source of funds 

used to purchase the seized asset. 

(2) Any factual recitation or 

documentation of any type in a petition 

must be supported by a declaration 

under penalty of perjury that meets the 

requirements of 28 U.S.C. 1746. 

(d) Releases. In addition to the 

contents of the petition for remission or 

mitigation set forth in § 9.3(c) of this 

part, upon request of the agency, the 

petitioner shall also furnish the agency 

with an instrument executed by the 

titled or registered owner and any other 

known claimant of an interest in the 

property releasing interest in such 

property. 

(e) Filing petition with agency. (1) A 

petition for remission or mitigation 

subject to administrative forfeiture is to 

be sent to the official address provided 

in the notice of seizure and shall be 

sworn to by the petitioner or by the 

petitioner’s attorney upon information 

and belief, supported by the client’s 

sworn notice of representation pursuant 

to 28 U.S.C. 1746, as set out in § 9.9(g) 

of this part. 

(2) If the notice of seizure does not 

provide an official address, the petition 

shall be addressed to the appropriate 

Federal agency as follows: 

(i)(A) DEA: All submissions must be 

filed with the Forfeiture Counsel, Asset 

Forfeiture Section, Office of Chief 

Counsel, Drug Enforcement 

Administration, HQS Forfeiture 

Response, P.O. Box 1475, Quantico, 

Virginia 22134–1475. 

(B) Correspondence via private 

delivery must be filed with the 

Forfeiture Counsel, Asset Forfeiture 

Section (CCF), Office of Chief Counsel, 

Drug Enforcement Administration, 8701 

Morrissette Drive, Springfield, Virginia 

22152. 

(C) Submission by facsimile or other 

electronic means will not be accepted. 

(ii)(A) FBI: All submissions must be 

filed with the FBI Special Agent in 

Charge at the Field Office that seized the 

property. 

(B) Submission by facsimile or other 

electronic means will not be accepted. 

(iii)(A) ATF: All submissions must be 

filed with the Office of Chief Counsel, 

Attention: Forfeiture Counsel, 99 New 

York Avenue, NE, Washington, DC 

20226. 

(B) Submission by facsimile or other 

electronic means will not be accepted. 

(f) Agency investigation. Upon receipt 

of a petition, the seizing agency shall 

investigate the merits of the petition and 

may prepare a written report containing 

the results of that investigation. This 

report shall be submitted to the ruling 

official for review and consideration. 

(g) Ruling. Upon receipt of the 

petition and the agency report, the 

ruling official for the seizing agency 

shall review the petition and the report, 

if any, and shall rule on the merits of 

the petition. No hearing shall be held. 

(h) Petitions granted. If the ruling 

official grants a remission or mitigation 

of the forfeiture, a copy of the decision 

shall be mailed to the petitioner or, if 

represented by an attorney, to the 

petitioner’s attorney. A copy shall also 

be sent to the United States Marshals 

Service (USMS) or other property 

custodian. The written decision shall 

include the terms and conditions, if any, 

upon which the remission or mitigation 

is granted and the procedures the 

petitioner must follow to obtain release 

of the property or the monetary interest 

therein. 

(i) Petitions denied. If the ruling 

official denies a petition, a copy of the 

decision shall be mailed to the 

petitioner or, if represented by an 

attorney, to the petitioner’s attorney of 

record. A copy of the decision shall also 

be sent to the USMS or other property 

custodian. The decision shall specify 

the reason that the petition was denied. 

The decision shall advise the petitioner 

that a request for reconsideration of the 

denial of the petition may be submitted 

to the ruling official in accordance with 

§ 9.3(j) of this part. 

(j) Request for reconsideration. (1) A 

request for reconsideration of the denial 

of the petition shall be considered if: 

(i) It is postmarked or received by the 

office of the ruling official within 10 

days from the receipt of the notice of 

denial of the petition by the petitioner; 

and 

(ii) The request is based on 

information or evidence not previously 

considered that is material to the basis 

for the denial or presents a basis clearly 

demonstrating that the denial was 

erroneous. 

(2) In no event shall a request for 

reconsideration be decided by the same 

ruling official who ruled on the original 

petition. 

(3) Only one request for 

reconsideration of a denial of a petition 

shall be considered. 

(k) Restoration of proceeds from sale. 

(1) A petition for restoration of the 

proceeds from the sale of forfeited 

property, or for the appraised value of 

forfeited property when the forfeited 

property has been retained by or 

delivered to a government agency for 

official use, may be submitted by an 

owner or lienholder in cases in which 

the petitioner: 

(i) Did not know of the seizure prior 

to the entry of a declaration of forfeiture; 

and 

(ii) Could not reasonably have known 

of the seizure prior to the entry of a 

declaration of forfeiture. 

(2) Such a petition shall be submitted 

pursuant to § 9.3(b) through (e) of this 

part within 90 days of the date the 

property is sold or otherwise disposed 

of. 

§ 9.4 Petitions in judicial forfeiture cases. 

(a) Notice of seizure. The notice of 

seizure and intent to forfeit the property 

shall advise any persons who may have 

a present ownership interest in the 

property to submit their petitions for 

remission or mitigation within 30 days 

of the date they receive the notice in 

order to facilitate processing. Petitions 

shall be considered any time after notice 

until such time as the forfeited property 

is placed in official use, sold, or 

otherwise disposed of according to law, 

except in cases involving petitions to 

restore property. A notice of seizure 

shall include the title of the ruling 

official and the mailing and street 

address of the official to whom petitions 

should be sent, the name of the agency 

seizing the property, an asset identifier 

number, and the district court docket 

number. 

(b) Persons who may file. A petition 

for remission or mitigation must be filed 

by a petitioner as defined in § 9.2(p) of 

this part or as prescribed in § 9.9(g) and 

(h) of this part. 

(c) Contents of petition. (1) All 

petitions must include the following 

information in clear and concise terms: 

(i) The name, address, and social 

security or other taxpayer identification 

number of the person claiming an 

interest in the seized property who is 

seeking remission or mitigation; 

(ii) The name of the seizing agency, 

the asset identifier number, and the date 

and place of seizure; 

(iii) The district court docket number; 

(iv) A complete description of the 

property, including the address or legal 

description of real property, and make, 

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model, and serial numbers of personal 

property, if any; and 

(v) A description of the petitioner’s 

interest in the property as owner, 

lienholder, or otherwise, supported by 

original or certified bills of sale, 

contracts, mortgages, deeds, or other 

documentary evidence. 

(2) Any factual recitation or 

documentation of any type in a petition 

must be supported by a declaration 

under penalty of perjury that meets the 

requirements of 28 U.S.C. 1746. 

(d) Releases. In addition to the 

content of the petition for remission or 

mitigation set forth in § 9.4(c) of this 

part, the petitioner, upon request, also 

shall furnish the agency with an 

instrument executed by the titled or 

registered owner and any other known 

claimant of an interest in the property 

releasing the interest in such property. 

(e) Filing petition with Department of 

Justice. A petition for remission or 

mitigation of a judicial forfeiture shall 

be addressed to the Attorney General; 

shall be sworn to by the petitioner or by 

the petitioner’s attorney upon 

information and belief, supported by the 

client’s sworn notice of representation 

pursuant to 28 U.S.C. 1746, as set forth 

in § 9.9(g) of this part; and shall be 

submitted to the U.S. Attorney for the 

district in which the judicial forfeiture 

proceedings are brought. 

(f) Agency investigation and 

recommendation; U.S. Attorney’s 

recommendation. Upon receipt of a 

petition, the U.S. Attorney shall direct 

the seizing agency to investigate the 

merits of the petition based on the 

information provided by the petitioner 

and the totality of the agency’s 

investigation of the underlying basis for 

forfeiture. The agency shall submit to 

the U.S. Attorney a report of its 

investigation and its recommendation 

on whether the petition should be 

granted or denied. Upon receipt of the 

agency’s report and recommendation, 

the U.S. Attorney shall forward to the 

Chief, Asset Forfeiture and Money 

Laundering Section, the petition, the 

seizing agency’s report and 

recommendation, and the U.S. 

Attorney’s recommendation on whether 

the petition should be granted or 

denied. 

(g) Ruling. The Chief shall rule on the 

petition. No hearing shall be held. The 

Chief shall not rule on any petition for 

remission if such remission was 

previously denied by the agency 

pursuant to § 9.3 of this part. 

(h) Petitions under Internal Revenue 

Service liquor laws. The Chief shall 

accept and consider petitions submitted 

in judicial forfeiture proceedings under 

the Internal Revenue Service liquor laws 

only prior to the time a decree of 

forfeiture is entered. Thereafter, the 

district court has exclusive jurisdiction. 

(i) Petitions granted. If the Chief 

grants a remission or mitigates the 

forfeiture, the Chief shall mail a copy of 

the decision to the petitioner (or, if 

represented by an attorney, to the 

petitioner’s attorney) and shall mail or 

transmit electronically a copy of the 

decision to the appropriate U.S. 

Attorney, the USMS or other property 

custodian, and the seizing agency. The 

written decision shall include the terms 

and conditions, if any, upon which the 

remission or mitigation is granted and 

the procedures the petitioner must 

follow to obtain release of the property 

or the monetary interest therein. The 

Chief shall advise the petitioner or the 

petitioner’s attorney to consult with the 

U.S. Attorney as to such terms and 

conditions. The U.S. Attorney shall 

confer with the seizing agency regarding 

the release and shall coordinate 

disposition of the property with that 

office and the USMS or other property 

custodian. 

(j) Petitions denied. If the Chief denies 

a petition, a copy of that decision shall 

be mailed to the petitioner (or, if 

represented by an attorney, to the 

petitioner’s attorney of record) and 

mailed or transmitted electronically to 

the appropriate U.S. Attorney, the 

USMS or other property custodian, and 

to the seizing agency. The decision shall 

specify the reason that the petition was 

denied. The decision shall advise the 

petitioner that a request for 

reconsideration of the denial of the 

petition may be submitted to the Chief 

at the address provided in the decision, 

in accordance with § 9.4(k) of this part. 

(k) Request for reconsideration. (1) A 

request for reconsideration of the denial 

shall be considered if: 

(i) It is postmarked or received by the 

Asset Forfeiture and Money Laundering 

Section at the address contained in the 

decision denying the petition within 10 

days from the receipt of the notice of 

denial of the petition by the petitioner; 

(ii) A copy of the request is also 

received by the appropriate U.S. 

Attorney within 10 days of the receipt 

of the denial by the petitioner; and 

(iii) The request is based on 

information or evidence not previously 

considered that is material to the basis 

for the denial or presents a basis clearly 

demonstrating that the denial was 

erroneous. 

(2) In no event shall a request for 

reconsideration be decided by the ruling 

official who ruled on the original 

petition. 

(3) Only one request for 

reconsideration of a denial of a petition 

shall be considered. 

(4) Upon receipt of the request for 

reconsideration of the denial of a 

petition, disposition of the property will 

be delayed pending notice of the 

decision at the request of the Chief. If 

the request for reconsideration is not 

received within the prescribed period, 

the USMS may dispose of the property. 

(l) Restoration of proceeds from sale. 

(1) A petition for restoration of the 

proceeds from the sale of forfeited 

property, or for the appraised value of 

forfeited property when the forfeited 

property has been retained by or 

delivered to a government agency for 

official use, may be submitted by an 

owner or lienholder in cases in which 

the petitioner: 

(i) Did not know of the seizure prior 

to the entry of a final order of forfeiture; 

and 

(ii) Could not reasonably have known 

of the seizure prior to the entry of a final 

order of forfeiture. 

(2) Such a petition must be submitted 

pursuant to § 9.4(b) through (e) of this 

part within 90 days of the date the 

property was sold or otherwise disposed 

of. 

§ 9.5 Criteria governing administrative and 

judicial remission and mitigation. 

(a) Remission. (1) The ruling official 

shall not grant remission of a forfeiture 

unless the petitioner establishes that the 

petitioner has a valid, good faith, and 

legally cognizable interest in the seized 

property as owner or lienholder as 

defined in this part and is an innocent 

owner within the meaning of 18 U.S.C. 

983(d)(2)(A) or 983(d)(3)(A). 

(2) For purposes of paragraph (a)(1) of 

this section, the knowledge and 

responsibilities of a petitioner’s 

representative, agent, or employee are 

imputed to the petitioner where the 

representative, agent, or employee was 

acting in the course of his or her 

employment and in furtherance of the 

petitioner’s business. 

(3) The petitioner has the burden of 

establishing the basis for granting a 

petition for remission or mitigation of 

forfeited property, a restoration of 

proceeds of sale or appraised value of 

forfeited property, or a reconsideration 

of a denial of such a petition. Failure to 

provide information or documents and 

to submit to interviews, as requested, 

may result in a denial of the petition. 

(4) The ruling official shall presume a 

valid forfeiture and shall not consider 

whether the evidence is sufficient to 

support the forfeiture. 

(5) Willful, materially-false statements 

or information made or furnished by the 

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petitioner in support of a petition for 

remission or mitigation of forfeited 

property, the restoration of proceeds or 

appraised value of forfeited property, or 

the reconsideration of a denial of any 

such petition, shall be grounds for 

denial of such petition and possible 

prosecution for the filing of false 

statements. 

(b) Mitigation. (1) The ruling official 

may grant mitigation to a party not 

involved in the commission of the 

offense underlying forfeiture: 

(i) Where the petitioner has not met 

the minimum conditions for remission, 

but the ruling official finds that some 

relief should be granted to avoid 

extreme hardship, and that return of the 

property combined with imposition of 

monetary or other conditions of 

mitigation in lieu of a complete 

forfeiture will promote the interest of 

justice and will not diminish the 

deterrent effect of the law. Extenuating 

circumstances justifying such a finding 

include those circumstances that reduce 

the responsibility of the petitioner for 

knowledge of the illegal activity, 

knowledge of the criminal record of a 

user of the property, or failure to take 

reasonable steps to prevent the illegal 

use or acquisition by another for some 

reason, such as a reasonable fear of 

reprisal; or 

(ii) Where the minimum standards for 

remission have been satisfied but the 

overall circumstances are such that, in 

the opinion of the ruling official, 

complete relief is not warranted. 

(2) The ruling official may in his or 

her discretion grant mitigation to a party 

involved in the commission of the 

offense underlying the forfeiture where 

certain mitigating factors exist, 

including, but not limited to: The lack 

of a prior record or evidence of similar 

criminal conduct; if the violation does 

not include drug distribution, 

manufacturing, or importation, the fact 

that the violator has taken steps, such as 

drug treatment, to prevent further 

criminal conduct; the fact that the 

violation was minimal and was not part 

of a larger criminal scheme; the fact that 

the violator has cooperated with 

Federal, state, or local investigations 

relating to the criminal conduct 

underlying the forfeiture; or the fact that 

complete forfeiture of an asset is not 

necessary to achieve the legitimate 

purposes of forfeiture. 

(3) Mitigation may take the form of a 

monetary condition or the imposition of 

other conditions relating to the 

continued use of the property, and the 

return of the property, in addition to the 

imposition of any other costs that would 

be chargeable as a condition to 

remission. This monetary condition is 

considered as an item of cost payable by 

the petitioner, and shall be deposited 

into the Assets Forfeiture Fund as an 

amount realized from forfeiture in 

accordance with the applicable statute. 

If the petitioner fails to accept the ruling 

official’s mitigation decision or any of 

its conditions, or fails to pay the 

monetary amount within 20 days of the 

receipt of the decision, the property 

shall be sold, and the monetary amount 

imposed and other costs chargeable as a 

condition to mitigation shall be 

subtracted from the proceeds of the sale 

before transmitting the remainder to the 

petitioner. 

§ 9.6 Special rules for specific petitioners. 

(a) General creditors. A general 

creditor may not be granted remission or 

mitigation of forfeiture unless he or she 

otherwise qualifies as petitioner under 

this part. 

(b) Rival claimants. If the beneficial 

owner of the forfeited property and the 

owner of a security interest in the same 

property each file a petition, and if both 

petitions are found to be meritorious, 

the claims of the beneficial owner shall 

take precedence. 

(c) Voluntary bailments. A petitioner 

who allows another to use his or her 

property without cost, and who is not in 

the business of lending money secured 

by property or of leasing or renting 

property for profit, shall be granted 

remission or mitigation of forfeiture in 

accordance with the provisions of § 9.5 

of this part. 

(d) Lessors. A person engaged in the 

business of leasing or renting real or 

personal property on a long-term basis 

with the right to sublease shall not be 

entitled to remission or mitigation of a 

forfeiture of such property unless the 

lessor can demonstrate compliance with 

all the requirements of § 9.5 of this part. 

(e) Straw owners. A petition by any 

person who has acquired a property 

interest recognizable under this part, 

and who knew or had reason to believe 

that the interest was conveyed by the 

previous owner for the purpose of 

circumventing seizure, forfeiture, or the 

regulations in this part, shall be denied. 

A petition by a person who purchases 

or owns property for another who has a 

record for related crimes as defined in 

§ 9.2 of this part, or a petition by a 

lienholder who knows or has reason to 

believe that the purchaser or owner of 

record is not the real purchaser or 

owner, shall be denied unless both the 

purchaser of record and the real 

purchaser or owner meet the 

requirements of § 9.5 of this part. 

(f) Judgment creditors. (1) A judgment 

creditor will be recognized as a 

lienholder if: 

(i) The judgment was duly recorded 

before the seizure of the property for 

forfeiture; 

(ii) Under applicable state or other 

local law, the judgment constitutes a 

valid lien on the property that attached 

to it before the seizure of the property 

for forfeiture; and 

(iii) The petitioner had no knowledge 

of the commission of any act or acts 

giving rise to the forfeiture at the time 

the judgment became a lien on the 

forfeited property. 

(2) A judgment creditor will not be 

recognized as a lienholder if the 

property in question is not property of 

which the judgment debtor is entitled to 

claim ownership under applicable state 

or other local law (e.g., stolen property). 

A judgment creditor is entitled under 

this part to no more than the amount of 

the judgment, exclusive of any interest, 

costs, or other fees including attorney 

fees associated with the action that led 

to the judgment or its collection. 

(3) A judgment creditor’s lien must be 

registered in the district where the 

property is located if the judgment was 

obtained outside the district. 

§ 9.7 Terms and conditions of remission 

and mitigation. 

(a) Owners. (1) An owner’s interest in 

property that has been forfeited is 

represented by the property itself or by 

a monetary interest equivalent to that 

interest at the time of seizure. Whether 

the property or a monetary equivalent 

will be remitted to an owner shall be 

determined at the discretion of the 

ruling official. 

(2) If a civil judicial forfeiture action 

against the property is pending, release 

of the property must await an 

appropriate court order. 

(3) Where the Government sells or 

disposes of the property prior to the 

grant of the remission, the owner shall 

receive the proceeds of that sale, less 

any costs incurred by the Government 

in the sale. The ruling official, at his or 

her discretion, may waive the deduction 

of costs and expenses incident to the 

forfeiture. 

(4) Where the owner does not comply 

with the conditions imposed upon 

release of the property by the ruling 

official, the property shall be sold. 

Following the sale, the proceeds shall be 

used to pay all costs of the forfeiture 

and disposition of the property, in 

addition to any monetary conditions 

imposed. The remaining balance shall 

be paid to the owner. 

(b) Lienholders. (1) When the forfeited 

property is to be retained for official use 

or transferred to a state or local law 

enforcement agency or foreign 

government pursuant to law, and 

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remission or mitigation has been 

granted to a lienholder, the recipient of 

the property shall assure that: 

(i) In the case of remission, the lien is 

satisfied as determined through the 

petition process; or 

(ii) In the case of mitigation, an 

amount equal to the net equity, less any 

monetary conditions imposed, is paid to 

the lienholder prior to the release of the 

property to the recipient agency or 

foreign government. 

(2) When the forfeited property is not 

retained for official use or transferred to 

another agency or foreign government 

pursuant to law, the lienholder shall be 

notified by the ruling official of the right 

to select either of the following 

alternatives: 

(i) Return of property. The lienholder 

may obtain possession of the property 

after paying the United States, through 

the ruling official, the costs and 

expenses incident to the forfeiture, the 

amount, if any, by which the appraised 

value of the property exceeds the 

lienholder’s net equity in the property, 

and any amount specified in the ruling 

official’s decision as a condition to 

remit the property. The ruling official, at 

his or her discretion, may waive costs 

and expenses incident to the forfeiture. 

The ruling official shall forward a copy 

of the decision, a memorandum of 

disposition, and the original releases to 

the USMS or other property custodian 

who shall thereafter release the property 

to the lienholder; or 

(ii) Sale of property and payment to 

lienholder. Subject to § 9.9(a) of this 

part, upon sale of the property, the 

lienholder may receive the payment of 

a monetary amount up to the sum of the 

lienholder’s net equity, less the 

expenses and costs incident to the 

forfeiture and sale of the property, and 

any other monetary conditions imposed. 

The ruling official, at his or her 

discretion, may waive costs and 

expenses incident to the forfeiture. 

(3) If the lienholder does not notify 

the ruling official of the selection of one 

of the two options set forth in § 9.7(b)(2) 

of this part within 20 days of the receipt 

of notification, the ruling official shall 

direct the USMS or other property 

custodian to sell the property and pay 

the lienholder an amount up to the net 

equity, less the costs and expenses 

incurred incident to the forfeiture and 

sale, and any monetary conditions 

imposed. In the event a lienholder 

subsequently receives a payment of any 

kind on the debt owed for which he or 

she received payment as a result of the 

granting of remission or mitigation, the 

lienholder shall reimburse the Assets 

Forfeiture Fund to the extent of the 

payment received. 

(4) Where the lienholder does not 

comply with the conditions imposed 

upon the release of the property, the 

property shall be sold after forfeiture. 

From the proceeds of the sale, all costs 

incident to the forfeiture and sale shall 

first be deducted, and the balance up to 

the net equity, less any monetary 

conditions, shall be paid to the 

lienholder. 

§ 9.8 Remission procedures for victims. 

This section applies to victims of an 

offense underlying the forfeiture of 

property, or of a related offense, who do 

not have a present ownership interest in 

the forfeited property (or, in the case of 

multiple victims of an offense, who do 

not have a present ownership interest in 

the forfeited property that is clearly 

superior to that of other petitioner 

victims). This section applies only with 

respect to property forfeited pursuant to 

statutes that explicitly authorize 

restoration or remission of forfeited 

property to victims. A victim requesting 

remission under this section may 

concurrently request remission as an 

owner, pursuant to the regulations set 

forth in §§ 9.3, 9.4, and 9.7 of this part. 

The claims of victims granted remission 

as both an owner and victim shall, like 

claims of other owners, have priority 

over the claims of any non-owner 

victims whose claims are recognized 

under this section. 

(a) Remission procedure for victims. 

(1) Where to file. Persons seeking 

remission as victims shall file petitions 

for remission with the appropriate 

deciding official as described in § 9.3(e) 

(administrative forfeiture) or § 9.4(e) 

(judicial forfeiture) of this part. 

(2) Time of decision. The deciding 

official or his designee as described in 

§ 9.1(b) of this part may consider 

petitions filed by persons claiming 

eligibility for remission as victims at 

any time prior to the disposal of the 

forfeited property in accordance with 

law. 

(3) Request for reconsideration. 

Persons denied remission under this 

section may request reconsideration of 

the denial, in accordance with § 9.3(j) 

(administrative forfeiture) or § 9.4(k) 

(judicial forfeiture) of this part. 

(b) Qualification to file. A victim, as 

defined in § 9.2 of this part, may be 

granted remission, if in addition to 

complying with the other applicable 

provisions of § 9.8, the victim 

satisfactorily demonstrates that: 

(1) A pecuniary loss of a specific 

amount has been directly caused by the 

criminal offense, or related offense, that 

was the underlying basis for the 

forfeiture, and that the loss is supported 

by documentary evidence including 

invoices and receipts; 

(2) The pecuniary loss is the direct 

result of the illegal acts and is not the 

result of otherwise lawful acts that were 

committed in the course of a criminal 

offense; 

(3) The victim did not knowingly 

contribute to, participate in, benefit 

from, or act in a willfully blind manner 

towards the commission of the offense, 

or related offense, that was the 

underlying basis of the forfeiture; 

(4) The victim has not in fact been 

compensated for the wrongful loss of 

the property by the perpetrator or 

others; and 

(5) The victim does not have recourse 

reasonably available to other assets from 

which to obtain compensation for the 

wrongful loss of the property. 

(c) Pecuniary loss. The amount of the 

pecuniary loss suffered by a victim for 

which remission may be granted is 

limited to the fair market value of the 

property of which the victim was 

deprived as of the date of the occurrence 

of the loss. No allowance shall be made 

for interest forgone or for collateral 

expenses incurred to recover lost 

property or to seek other recompense. 

(d) Torts. A tort associated with illegal 

activity that formed the basis for the 

forfeiture shall not be a basis for 

remission, unless it constitutes the 

illegal activity itself, nor shall remission 

be granted for physical injuries to a 

petitioner or for damage to a petitioner’s 

property. 

(e) Denial of petition. In the exercise 

of his or her discretion, the ruling 

official may decline to grant remission 

where: 

(1) There is substantial difficulty in 

calculating the pecuniary loss incurred 

by the victim or victims; 

(2) The amount of the remission, if 

granted, would be small compared with 

the amount of expenses incurred by the 

Government in determining whether to 

grant remission; or 

(3) The total number of victims is 

large and the monetary amount of the 

remission so small as to make its 

granting impractical. 

(f) Pro rata basis. In granting 

remission to multiple victims pursuant 

to this section, the ruling official should 

generally grant remission on a pro rata 

basis to recognized victims when 

petitions cannot be granted in full due 

to the limited value of the forfeited 

property. However, the ruling official 

may consider, among others, the 

following factors in establishing 

appropriate priorities in individual 

cases: 

(1) The specificity and reliability of 

the evidence establishing a loss; 

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(2) The fact that a particular victim is 

suffering an extreme financial hardship; 

(3) The fact that a particular victim 

has cooperated with the Government in 

the investigation related to the forfeiture 

or to a related prosecution or civil 

action; and 

(4) In the case of petitions filed by 

multiple victims of related offenses, the 

fact that a particular victim is a victim 

of the offense underlying the forfeiture. 

(g) Reimbursement. Any petitioner 

granted remission pursuant to this part 

shall reimburse the Assets Forfeiture 

Fund for the amount received to the 

extent the individual later receives 

compensation for the loss of the 

property from any other source. The 

petitioner shall surrender the 

reimbursement upon payment from any 

secondary source. 

(h) Claims of financial institution 

regulatory agencies. In cases involving 

property forfeitable under 18 U.S.C. 

981(a)(1)(C) or (D), the ruling official 

may decline to grant a petition filed by 

a petitioner in whole or in part due to 

the lack of sufficient forfeitable funds to 

satisfy both the petition and claims of 

the financial institution regulatory 

agencies pursuant to 18 U.S.C. 981(e)(3) 

or (7). Generally, claims of financial 

institution regulatory agencies pursuant 

to 18 U.S.C. 981(e)(3) or (7) shall take 

priority over claims of victims. 

(i) Amount of remission. Consistent 

with the Assets Forfeiture Fund statute 

(28 U.S.C. 524(c)), the amount of 

remission shall not exceed the victim’s 

share of the net proceeds of the 

forfeitures associated with the activity 

that caused the victim’s loss. The 

calculation of net proceeds includes, but 

is not limited to, the deduction of 

allowable government expenses and 

valid third-party claims. 

§ 9.9 Miscellaneous provisions. 

(a) Priority of payment. Except where 

otherwise provided in this part, costs 

incurred by the USMS and other 

agencies participating in the forfeiture 

that were incident to the forfeiture, sale, 

or other disposition of the property shall 

be deducted from the amount available 

for remission or mitigation. Such costs 

include, but are not limited to, court 

costs, storage costs, brokerage and other 

sales-related costs, the amount of any 

liens and associated costs paid by the 

Government on the property, costs 

incurred in paying the ordinary and 

necessary expenses of a business seized 

for forfeiture, awards for information as 

authorized by statute, expenses of 

trustees or other assistants pursuant to 

§ 9.9(c) of this part, investigative or 

prosecutive costs specially incurred 

incident to the particular forfeiture, and 

costs incurred incident to the processing 

of the petition(s) for remission or 

mitigation. The remaining balance shall 

be available for remission or mitigation. 

The ruling official shall direct the 

distribution of the remaining balance in 

the following order of priority, except 

that the ruling official may exercise 

discretion in determining the priority 

between petitioners belonging to classes 

described in paragraphs (a)(3) and (4) of 

this section in exceptional 

circumstances: 

(1) Owners; 

(2) Lienholders; 

(3) Federal financial institution 

regulatory agencies (pursuant to 

paragraph (e) of this section), not 

constituting owners or lienholders; and 

(4) Victims not constituting owners or 

lienholders (pursuant to § 9.8 of this 

part). 

(b) Sale or disposition of property 

prior to ruling. If forfeited property has 

been sold or otherwise disposed of prior 

to a ruling, the ruling official may grant 

relief in the form of a monetary amount. 

The amount realized by the sale of the 

property is presumed to be the value of 

the property. Monetary relief shall not 

be greater than the appraised value of 

the property at the time of seizure and 

shall not exceed the amount realized 

from the sale or other disposition. The 

proceeds of the sale shall be distributed 

as follows: 

(1) Payment of the Government’s 

expenses incurred incident to the 

forfeiture and sale, including court costs 

and storage charges, if any; 

(2) Payment to the petitioner of an 

amount up to his or her interest in the 

property; 

(3) Payment to the Assets Forfeiture 

Fund of all other costs and expenses 

incident to the forfeiture; 

(4) In the case of victims, payment of 

any amount up to the amount of his or 

her loss; and 

(5) Payment of the balance remaining, 

if any, to the Assets Forfeiture Fund. 

(c) Trustees and other assistants. In 

the exercise of his or her discretion, the 

ruling official, with the approval of the 

Asset Forfeiture and Money Laundering 

Section, may use the services of a 

trustee, other government official, or 

appointed contractors to notify potential 

petitioners, process petitions, and make 

recommendations to the ruling official 

on the distribution of property to 

petitioners. The expense for such 

assistance shall be paid out of the 

forfeited funds. 

(d) Other agencies of the United 

States. Where another agency of the 

United States is entitled to remission or 

mitigation of forfeited assets because of 

an interest that is recognizable under 

this part or is eligible for such transfer 

pursuant to 18 U.S.C. 981(e)(6), such 

agency shall request the transfer in 

writing, in addition to complying with 

any applicable provisions of §§ 9.3 

through 9.5 of this part. The decision to 

make such transfer shall be made in 

writing by the ruling official. 

(e) Financial institution regulatory 

agencies. A ruling official may direct the 

transfer of property under 18 U.S.C. 

981(e) to certain Federal financial 

institution regulatory agencies or an 

entity acting on their behalf, upon 

receipt of a written request, in lieu of 

ruling on a petition for remission or 

mitigation. 

(f) Transfers to foreign governments. 

A ruling official may decline to grant 

remission to any petitioner other than 

an owner or lienholder so that forfeited 

assets may be transferred to a foreign 

government pursuant to 18 U.S.C. 

981(i)(1), 19 U.S.C. 1616a(c)(2), or 21 

U.S.C. 881(e)(1)(E). 

(g) Filing by attorneys. (1) A petition 

for remission or mitigation may be filed 

by a petitioner or by his or her attorney 

or legal guardian. If an attorney files on 

behalf of the petitioner, the petition 

must include a signed and sworn 

statement by the client-petitioner stating 

that: 

(i) The attorney has the authority to 

represent the petitioner in this 

proceeding; 

(ii) The petitioner has fully reviewed 

the petition; and 

(iii) The petition is truthful and 

accurate in every respect. 

(2) Verbal notification of 

representation is not acceptable. 

Responses and notification of rulings 

shall not be sent to an attorney claiming 

to represent a petitioner unless a written 

notice of representation is filed. No 

extensions of time shall be granted due 

to delays in submission of the notice of 

representation. 

(h) Consolidated petitions. At the 

discretion of the ruling official in 

individual cases, a petition may be filed 

by one petitioner on behalf of other 

petitioners, provided the petitions are 

based on similar underlying facts, and 

the petitioner who files the petition has 

written authority to do so on behalf of 

the other petitioners. This authority 

must be either expressed in documents 

giving the petitioner the authority to file 

petitions for remission, or reasonably 

implied from documents giving the 

petitioner express authority to file 

claims or lawsuits related to the course 

of conduct in question on behalf of 

these petitioners. An insurer or an 

administrator of an employee benefit 

plan, for example, which itself has 

standing to file a petition as a ‘‘victim’’ 

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26678 Federal Register / Vol. 76, No. 89 / Monday, May 9, 2011 / Proposed Rules 

within the meaning of § 9.2 of this part, 

may also file a petition on behalf of its 

insured or plan beneficiaries for any 

claims they may have based on copayments made to the perpetrator of the 

offense underlying the forfeiture or the 

perpetrator of a ‘‘related offense’’ within 

the meaning of § 9.2 of this part, if the 

authority to file claims or lawsuits is 

contained in the document or 

documents establishing the plan. Where 

such a petition is filed, any amounts 

granted as a remission must be 

transferred to the other petitioners, not 

the party filing the petition; although, in 

his or her discretion, the ruling official 

may use the actual petitioner as an 

intermediary for transferring the 

amounts authorized as a remission to 

the other petitioners. 

Dated: April 18, 2011. 

Eric H. Holder, Jr., 

Attorney General. 

[FR Doc. 2011–9826 Filed 5–6–11; 8:45 am] 

BILLING CODE 4410–02–P; 4410–FY–P; 4410–09–P; 

4410–14–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 31 

[REG–151687–10] 

RIN 1545–BJ98 

Withholding on Payments by 

Government Entities to Persons 

Providing Property or Services 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations relating to 

withholding by government entities on 

payments to persons providing property 

or services. The proposed regulations 

reflect changes in the law made by the 

Tax Increase Prevention and 

Reconciliation Act of 2005 that require 

Federal, State, and local government 

entities to withhold income tax when 

making payments to persons providing 

property or services. These proposed 

regulations would change the provisions 

related to the effective date of the final 

regulations concerning these 

withholding requirements that are being 

issued concurrently with these 

proposed regulations. The guidance 

affects government entities that are 

required to withhold from payments to 

persons providing property or services 

and persons receiving the payments. 

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by August 8, 2011. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–151687–10), room 

5205, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:LPD:PR (REG–151687– 

10), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC or sent 

electronically via the Federal 

eRulemaking Portal at http:// 

www.regulations.gov/ (IRS REG– 

151687–10). 

FOR FURTHER INFORMATION CONTACT: 

Concerning these proposed regulations, 

A.G. Kelley, (202) 622–6040; concerning 

submissions of comments or to request 

a public hearing, Oluwafunmilayo 

Taylor at (202) 622–7180 (not toll-free 

numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains proposed 

amendments to 26 CFR Part 31 under 

section 3402(t) of the Internal Revenue 

Code (Code). Section 3402(t) of the Code 

was added by section 511 of the Tax 

Increase Prevention and Reconciliation 

Act of 2005, Public Law 109–222 

(TIPRA), 120 Stat. 345, which was 

enacted into law on May 17, 2006. 

Section 3402(t)(1) provides that the 

Government of the United States, every 

State, every political subdivision 

thereof, and every instrumentality of the 

foregoing (including multi-State 

agencies) making any payment to any 

person providing any property or 

services (including any payment made 

in connection with a government 

voucher or certificate program which 

functions as a payment for property or 

services) shall deduct and withhold 

from such payment a tax in an amount 

equal to 3 percent of such payment. 

Section 3402(t)(2) provides exceptions 

to withholding under section 3402(t). 

Section 1511 of the American 

Recovery and Reinvestment Act of 2009 

(Pub. L. 111–5), 123 Stat. 115, 355, 

amended the effective date of section 

3402(t) withholding. As amended, the 

statute provides that section 3402(t) 

applies to payments made after 

December 31, 2011. 

Notice 2010–91, 2010–52 IRB 915, 

provided interim guidance on the 

application of section 3402(t) to 

payments by debit cards, credit cards, 

stored value cards, and other payment 

cards. 

Proposed regulations under sections 

3402(t), 3406, 6011, 6051, 6071, and 

6302 of the Code were published in the 

Federal Register on December 5, 2008 

(REG–158747–06, 73 FR 74082, 2009–4 

IRB 362) (the ‘‘2008 proposed 

regulations’’). The 2008 proposed 

regulations proposed applying the 

withholding obligations to payments 

beginning on January 1, 2011, but 

proposed excluding payments made 

under contracts existing on January 1, 

2011, unless those contracts were 

materially modified. The final 

regulations provide an additional oneyear extension beyond the amended 

effective date of the statute. Thus, under 

the final regulations, the withholding 

obligation applies to payments made 

after December 31, 2012, and the 

exclusion applies to contracts existing 

on December 31, 2012, that are not 

materially modified on or after 

December 31, 2012. These final 

regulations under sections 3402(t), 3406, 

6011, 6051, 6071, and 6302 of the Code 

(REG–158747–06, Treasury decision) are 

being published in the Federal Register 

concurrently with these proposed 

regulations. 

Several commenters on the 2008 

proposed regulations expressed concern 

that the requirement to differentiate 

between payments subject to 

withholding and payments not subject 

to withholding based on whether the 

payment was made under a contract 

existing on December 31, 2011, and 

whether that contract had been 

materially modified, would be 

burdensome to apply. In response to 

these concerns, these proposed 

regulations would provide that the 

exclusion for payments under existing 

contracts that had not been materially 

modified would terminate with 

payments after December 31, 2013. 

Thus, these proposed regulations would 

subject payments under all contracts to 

section 3402(t) withholding after 

December 31, 2013, unless another 

exception applied. This rule would 

avoid the administrative burden of 

distinguishing between payments made 

under existing contracts and all other 

payments while allowing time to 

address concerns about applying the 

withholding requirements to existing 

contracts. 

Proposed Effective Date 

These regulations are proposed to 

apply to payments made after December 

31, 2011. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

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